Daily market review

United States

A late recovery in mega-cap growth stocks lifted US equities Tuesday, with Apple and Amazon leading the rebound after early weakness on a volatile day. The Dow Jones industrial index rose 0.5 percent, the S&P 500 gained 1.1 percent, and the NASDAQ advanced 1.7 percent.

Among sectors, communications services and consumer discretionary led the gainers, with Facebook up 2.7 percent and Amazon up 5.7 percent, the latter benefiting from an analyst upgrade.

Consumer staples also outperformed as concerns about renewed shutdowns bolstered the stay-at-home trade. These worries were in focus in the morning after the UK imposed new restrictions to limit spread of the virus. Among best performers were Clorox, the cleaning supply leader, up 1.9 percent and Conagra, the packaged food giant, up 0.3 percent.

Real estate and homebuilders outperformed after another strong housing report, this time existing home sales. Fed Chair Jay Powell's renewed pledge to keep rates low for longer gave housing stocks a lift too. Lennar, the builder, rose 4.0 percent, and Toll Brothers was up 2.5 percent. On the downside, bank stocks remained under pressure, along with health care.

Among companies in focus, Carvana, the online car broker, soared 31 percent after beating earnings expectations and issuing surprisingly strong guidance. On the downside, electric auto maker Tesla fell 5.6 percent after CEO Elon Musk made gloomy comments about battery production.

In US economic data, existing home sales jumped another 2.4 percent in August for year-over-year growth of 10.5 percent. The annual rate, at 6 million in August, was 4.2 percent above February's pre-virus rate of 5.760 million and 10.7 percent above January's 5.420 million.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose eight cents to US$41.74, while spot gold fell US$8.25 to US$1,902.69. The US dollar rose against most major currencies. The US Treasury 30-year bond yield was flat at 1.43 percent while the 10-year note yield was unchanged at 0.67 percent.


Equities ended mixed to higher Tuesday in a modest bounce after Monday's losses, with oil & gas shares leading. The Europe-wide STOXX 600 firmed 0.2 percent, the German DAX percent rose 0.4 percent, the French CAC declined 0.4 percent, and the UK FTSE-100 rose 0.4 percent.

Despite the modest gains, sectors including travel & leisure remained under selling pressure as investors focus on resurgent coronavirus cases in Europe, and the UK in particular reintroducing restrictions to curb the spread.

Among sectors, outperforming were oil & gas, autos & parts, technology, and personal & household goods, while lagging were insurance, travel & leisure, basic resources, banks, and health care. UK oil supermajors BP rose 2.5 percent and Royal Dutch Shell gained 2.9 percent to reverse part of Monday's steep losses.

Among other companies in focus, UK retailer Kingfisher rallied 9.5 percent after a revenues beat. Maersk, the shipping giant, rose 4.1 percent on an upgrade at JP Morgan, and British American Tobacco rose 4.1 percent on an upgrade at RBC Capital Markets.

Notable decliners included Hikma Pharmaceuticals, down 4.5 percent on a downgrade at Morgan Stanley, and Whitbread, the UK hospitality business, down 2.7 percent after reporting bleak business conditions and warning of layoffs as the UK furlough scheme is set to expire.

Asia Pacific

Most major Asian markets closed lower Tuesday, with a bare regional data calendar keeping much of the focus on Wall Street declines and on reports implicating major banks in suspicious transactions. Renewed concerns about a second wave of COVID-19 in Europe also weighed on investor sentiment.

The Shanghai Composite index fell 1.3 percent on the day, Hong Kong's Hang Seng index dropped 0.9 percent, and Australia's All Ordinaries index closed down 0.7 percent. Japan's Nikkei and Topix indices were again closed for a national holiday Tuesday.

Shares of major regional airlines were among the worst performers Tuesday, reflecting concerns that tighter travel restrictions are set to be reimposed in response to the rise in Covid-19 cases in Europe. HSBC and Standard Chartered also sold off heavily for the second consecutive day after being identified as among the major banks being investigated for suspicious transactions.

Looking ahead*

On Wednesday in Asia-Pacific, the Reserve Bank of New Zealand is scheduled to issue its policy announcement plus Singapore CPI and the Japanese PMI composite flash reports are due. In Europe, German Gfk consumer climate, German PMI composite flash, French PMI composite flash, Eurozone PMI composite flash, and UK PMI composite flash figures are scheduled. In North America, Fed Chair Jerome Powell is to speak, and US PMI composite flash and FHFA house price index reports are on tap.

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