Daily market review

United States

Modest gains in mega-caps kept major stock indexes in positive territory Thursday in volatile trading while much of the market struggled with uncertainty around the US recovery. The Dow Jones industrial index rose 0.2 percent, the S&P 500 firmed 0.3 percent, and the NASDAQ gained 0.4 percent.

News that fiscal-stimulus talks would resume on Capitol Hill gave equities a brief lift, but stocks pegged to the recovery trade continued to lag. More comments from Federal Reserve officials underlining the need for fiscal action hurt risk appetite, along with uncertainty over US elections, including President Trump's statement that he might not honor the outcome.

Among sectors, utilities and consumer staples outperformed, and gains in Apple, up 1.0 percent, and Microsoft, up 1.3 percent, gave technology shares a boost, along with semiconductors. An uptick in Amazon, up 0.7 percent, supported consumer discretionary, along with homebuilders.

On the negative side, airlines and aerospace & defense depressed industrials, with energy and health care also lagging the market.

Among companies in focus, Accenture, the consulting company, fell 7.1 percent after an earnings miss and weaker guidance. Carmax, the auto broker, fell 11 percent despite beating expectations, as whisper numbers were even higher.

In US economic data, initial jobless claims rose 4,000 in the September 19 week to a roughly as-expected 870,000, little changed from the three prior weeks which ranged from 866,000 to 893,000. Separately, new home sales surged 10.5 percent in August to a 1.011 million annual rate that well exceeded Econoday's consensus range.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 27 cents to US$41.82, while spot gold rose US$9.37 to US$1,868.88. The US dollar was little changed against most major currencies. The US Treasury 30-year bond yield declined 2 basis points to 1.40 percent while the 10-year note yield was off 1 basis point to 0.66 percent.


Virus worries hurt equities Thursday. The Europe-wide STOXX 600 fell 1.0 percent, the German DAX percent eased 0.3 percent, the French CAC declined 0.8 percent, and the UK FTSE-100 was off 1.3 percent.

UK shares lagged as markets reacted badly to news the UK Treasury would reduce its support for unemployed workers along with uncertainty over possible new restrictions on UK commerce to combat the spreading virus.

Risk sentiment has been damaged by Brexit worries along fiscal-stimulus doubts in the US where Federal Reserve officials have been restating their concerns about what fiscal inaction will mean for the recovery.

Worst hit among sectors were retail, oil & gas, financial services, health care, travel & leisure, and industrials. Outperformers included autos & parts real estate, banks, and media. Among companies in focus, Cineworld, the UK movie chain, fell 15 percent after disappointing first-half results. Smiths Group, the UK engineering business, fell 7.5 percent on an earnings miss. On the positive side Italy's Banco BPM rose 5.8 percent on speculation it will be acquired by UniCredit, its competitor.

In economic data, the German Ifo overall business climate indicator rose from 92.5 in August to 93.4 in September, its smallest rise since the recovery started in May and on the soft side of market expectations. That said, the headline index is now just 2.5 points short of its pre-pandemic level in February.

Asia Pacific

Major Asian markets posted sizable declines Thursday, following the lead set by Wall Street Wednesday with the tech sector underperforming across much of the region. Hong Kong's Hang Seng index and the Shanghai Composite index dropped 1.8 percent and 1.7 percent respectively, while Japan's Nikkei and Topix both fell 1.1 percent.

Korea's Kospi index was the worst performer in the region, falling 2.6 percent after the South Korean defense ministry accused the North Korean regime of killing a South Korean government official earlier in the week. Australia's All Ordinaries closed down 0.9 percent.

Hong Kong's merchandise trade deficit narrowed from HK$29.8 billion in July to HK$14.6 billion in August. Exports fell 2.3 percent on the year after a decline of 3.0 percent previously, while imports fell 5.7 percent after dropping 3.4 percent previously. Demand remained weak across most of Hong Kong's major trading partners, including China, Japan, and the United States. Officials expect the ongoing impact of the Covid-19 pandemic and US-China tensions will continue to "constrain" export performance in coming months.

Looking ahead*

On Friday in Asia-Pacific, the Singapore industrial production report is due. In Europe, UK public sector finances, Eurozone M3 money supply, and Italian business and consumer confidence reports are scheduled. In North America, the US durable goods report is on tap.

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