Daily market review

United States

Strength in banks and energy stocks helped lead cyclicals and US equities higher Monday. The Dow Jones industrial index rose 1.5 percent, the S&P 500 gained 1.6 percent, and the NASDAQ advanced 1.9 percent.

Cyclicals got a boost from big pharma Johnson & Johnson's report that its Covid-19 vaccine was producing a "strong" immune response in its clinical trials.

Banks and investment management stocks saw bargain-hunting after recent under-performance, with a rally in European bank stocks providing a trigger. Invesco was up 6.2 percent, and Lincoln National up 4.7 percent. Among money-center banks, JP Morgan rose 2.9 percent and Citigroup rose 3.1 percent.

Among sectors, industrials advanced on strength in airlines, with American Airlines up 3.8 percent after better air traffic numbers. Energy rose with exploration and production companies leading, including Apache up 4.3 percent. Materials rose with metals strong as Alcoa rose 6.0 percent. On the downside, the FAANGs lagged to hold back technology and communications services. Health care lagged the most.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 52 cents to US$42.45, while spot gold rose US$17.03 to US$1,880.92. The US dollar fell against most major currencies. The US Treasury 30-year bond yield rose 2 basis points to 1.42 percent while the 10-year note yield was flat at 0.66 percent.


A rally in bank stocks and better Chinese economic data gave equities a boost Monday. The Europe-wide STOXX 600 rose 2.2 percent, the German DAX percent gained 3.2 percent, the French CAC gained 2.4 percent, and the UK FTSE-100 rose 1.5 percent.

News that Chinese insurance company Ping An would raise its stake in HSBC, up 8.9 percent, helped ignite a rally in beaten-down bank stocks. Commerzbank rose 5.2 percent after announcing a new CEO. Markets reacted favorably to an upbeat report on profits at Chinese industrial firms, with China-sensitive industrials and autos getting a boost.

Among sectors, best performers in addition to banks included financial services, autos & parts, insurance, industrials, technology, and travel & leisure. Lagging but still higher were health care, utilities, telecom, and basic resources.

Among companies in focus, Arcelor Mittal rose 11 percent on a share buyback and sale of its US unit. Carnival Corp. rose 4.6 percent on an analyst upgrade, and Airbus Group rose 4 percent after Switzerland approved a large purchase of fighter jets.

Asia Pacific

Major Asian markets opened the week with mixed results Monday, with a bare regional data calendar keeping investor focus on company-specific and other news. Japan's Nikkei and Topix indices posted solid gains of 1.3 percent and 17 percent respectively, while Hong Kong's Hang Seng index closed up 1.0 percent.

Shares of Hong Kong listed semiconductor manufacturer SMIC fell sharply on reports that US authorities have imposed export restrictions on the company, citing possible links with the Chinese military.

Chinese industrial profits data published over the weekend rose 19.1 percent in year-on-year terms in August, slowing slightly from an increase of 19.6 percent in July, with year-to-date growth improving from a drop of 8.1 percent previously to a fall of 4.4 percent. This is broadly in line with other previously released data suggesting that the Chinese manufacturing sector is continuing to recover, with both the PMI manufacturing survey and official industrial production data showing the sector expanded in August.

Looking ahead*

On Tuesday in Europe, Italian PPI, UK M4 money supply, Eurozone EC economic sentiment, and German CPI reports are scheduled. In North America, Canadian industrial product price index, US goods trade, US retail and wholesale inventories, US Case-Shiller House Price Index, and US consumer confidence reports are on tap.

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