Daily market review

United States

Hopes for a deal on a US fiscal stimulus package gave equities a boost as talks continued Wednesday. The Dow Jones industrial index gained 1.2 percent, the S&P 500 gained 0.8 percent, and the NASDAQ was up 0.7 percent.

US Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi emerged from a meeting to say they had not reached a deal but would continue to negotiate. Markets also took note of better US economic data which followed positive Chinese and Japanese data overnight.

ADP's estimate for September private payrolls came in at 749,000 versus Econoday's consensus for 650,000. The Chicago PMI for September was reported at a much stronger-than-expected 62.4 versus August's 51.2; gains were widespread led by an 11.0-point surge in new orders to 64. And pending home sales, also released Wednesday, continued the run of surprisingly strong housing reports.

Among sectors, cyclical/value stocks out-performed growth. Health care topped the leaders, with hospitals and managed care responding favorably to comments from former Vice President Joe Biden on his health plan. Consumer staples outperformed. Banks and credit cards gave financials a lift. Consumer discretionary got a boost from builders after the buoyant home sales report.

Lagging but still better were communications services. Disney, off 1.1 percent on news of huge layoffs, was a distinct drag on the indexes. Energy weakened as oil explorers suffered, and industrials were hit by weakness in aerospace & defense.

Among companies in the news, Nikola jumped 15 percent on a report General Motors may take a larger stake in the electric automaker. Duke Energy rose 7.5 percent on a report the utility has been approached by potential acquirers.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 16 cents to US$40.95 while spot gold fell US$10.73 to US$1,886.50. The US dollar eased against most major currencies. The US Treasury 30-year bond yield rose 4 basis points to 1.46 percent while the 10-year note yield rose 3 basis points to 0.68 percent.


Virus worries depressed equities Wednesday but hopes for progress on US fiscal stimulus lifted major indexes from the day's lows. The Europe-wide STOXX 600 eased 0.1 percent, the German DAX percent fell 0.5 percent, the French CAC was off 0.6 percent, and the UK FTSE-100 declined 0.5 percent.

Reports suggesting new lockdown measures are likely in Spain, France, Germany, and the UK added to the downbeat mood. Risk assets also reacted poorly to President Trump's comments at the presidential debate that raised concern that he may not accept the results of the US election.

Among sectors, the weakest performers were industrials, technology, personal & household goods, health care, basic resources, and travel & leisure. Best off were real estate, oil & gas, media, financial services, food & beverage, and autos & parts.

Among companies in focus, Royal Dutch Shell fell 2.0 percent after announcing more layoffs as part of its green energy plans. ICAP, the big interdealer broker, dropped 16 percent after news it is in talks to buy Liquidnet, the electronic trading network. On the positive side, rental car agency Europcar jumped 20 percent on a new business partnership in Canada.

Asia Pacific

Most major Asian markets closed lower Wednesday, with regional sentiment impacted by a fall in US futures as the US presidential election debate was held during the Asian trading session. Australia's All Ordinaries index fell 2.2 percent on the day, while Japan's Nikkei and Topix indices also dropped heavily, closing down 1.5 percent and 2.0 percent respectively. The Shanghai Composite index recorded a more modest decline, down 0.2 percent, while Hong Kong's Hang Seng index outperformed with an increase of 0.8 percent, boosted in part by strong gains in shares of major property developers.

Chinese manufacturing PMI data published Wednesday show the sector continuing to recover at a strong rate. The Markit Manufacturing PMI for China eased from 53.1 in August, its highest level since January 2011, to 53.0 in September, while the official CFLP manufacturing PMI survey showed an increase in its headline index from 51.0 to 51.5. The CFLP non-manufacturing PMI index also showed a further improvement in conditions in September, rising from 55.2 to 55.9.

Japan's industrial production index rose 1.7 percent on the month in August, the third consecutive increase and just above expectations. In year-on-year terms, the index fell 13.3 percent after dropping 15.5 percent in July. Japanese retail sales fell 1.9 percent on the year in August after dropping 2.9 percent in July, a smaller decline than the consensus forecast for a 3.5 percent drop. Sales rose 4.6 percent on the month after they fell 3.4 percent previously.

Looking ahead*

On Thursday in Asia/Pacific, the Japanese Tankan, Japanese PMI final manufacturing, and Indian PMI manufacturing reports are on the calendar. In Europe, the following reports are scheduled: Swiss CPI, Swiss retail sales, Swiss SVME PMI, French PMI manufacturing final, German PMI manufacturing final, Eurozone PMI manufacturing final, UK PMI manufacturing final, Eurozone PPI, and Eurozone unemployment rate. In North America, US jobless claims, US personal income and outlays, US PMI manufacturing final, US ISM manufacturing, and US construction spending reports are on tap.

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