Daily market review

United States

Equities seesawed on alternating upbeat and negative headlines from US fiscal stimulus talks Thursday, with technology and mega-cap momentum stocks leading and cyclicals lagging. The Dow Jones industrial index edged 0.1 percent higher, the S&P 500 gained 0.5 percent, and the NASDAQ was up 1.4 percent.

News that the White House had raised its spending proposal raised expectations for a fiscal deal, though comments in the afternoon from Democratic leaders suggested no deal was in sight. Still, the major indexes ended up from the day's worst levels.

Positive commentary on business conditions from French chipmaker and Apple supplier STMicroelectronics, up 8.3 percent, gave US tech stocks a boost, with Advanced Micro Devices up 3.5 percent and Apple up 0.9 percent. Strength in other mega-caps, including Microsoft, up 1.0 percent, helped tech stocks outperform. An analyst upgrade lifted Amazon, up 2.3 percent, to boost consumer discretionary shares. Google rose 1.4 percent, Netflix was up 5.5 percent, and Facebook was up 1.8 percent.

On the negative side, cyclicals were under pressure, with energy stocks off on oil price weakness as Chevron slipped 2.1 percent. Other laggards included financials, industrials, materials, and health care. Among financials, Goldman Sachs was off 1.2 percent while Travelers eased 0.4 percent.

Among companies in the news, vaccine maker Moderna fell 1.0 percent amid concern over possible delays in its vaccine reaching the market. Valero Energy fell 7.2 percent on a downgrade at Goldman Sachs.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 8 cents to US$40.86 while spot gold rose US$17.94 to US$1,904.44. The US dollar eased against most major currencies. The US Treasury 30-year bond yield was unchanged at 1.46 percent while the 10-year note yield declined 1 basis point to 0.67 percent.


Equities ended narrowly mixed Thursday amid cross-currents from conflicting corporate news, and uncertainty over Brexit. The Europe-wide STOXX 600 firmed 0.2 percent, the German DAX percent declined 0.2 percent, the French CAC gained 0.4 percent, and the UK FTSE-100 rose 0.2 percent.

Markets were hit by weakness at oil supermajors Royal Dutch Shell, down 3.7 percent on reorganization news, and Total, off 3.6 percent as oil prices fell. German markets lagged largely because of a 13 percent drop in chemicals giant Bayer on gloomy guidance. On the plus side, retailer H&M rose 5.7 percent on an earnings beat, and chipmaker STMicroelectronics rose 8 percent on a revenues beat and upbeat guidance.

Brexit news was mixed, with the European Union proceeding with litigation against the UK for breaching its Brexit treaty obligations on the one hand, and reports saying the UK is increasingly optimistic about reaching a deal. Investors also focused on reports suggesting Eurozone finance ministers are to discuss the euro's strength as a factor restraining the euro area recovery.

Among sectors, outperformers included technology, retail, and utilities, while lagging most were telecom, travel & leisure, and energy.

In economic data, Eurozone joblessness continued to increase in August. A 251,000 rise followed a steeper revised 363,000 advance in July and lifted the unemployment rate from 8.0 to 8.1 percent, in line with the market consensus. The rate has increased every month since March and now equals its highest level since June 2018.

Asia Pacific

Trading in Japanese markets was halted Thursday after the Tokyo Stock Exchange announced that it had discovered a computer system malfunction ahead of the session open. Futures prices for the Nikkei index suggested investors were not alarmed about this disruption, and the TSE expressed confidence that trading would resume Friday. Markets were closed in China, Hong Kong, Korea, and Taiwan for national holidays. Australia's All Ordinaries index closed up 1.0 percent, broadly in line with moves on Wall Street Wednesday.

Japanese data published Thursday showed further weakness. Tankan's third-quarter measure of business conditions improved but remained deep in negative territory across both the manufacturing and non-manufacturing sectors, while large firms revised down their forecast for growth in capital spending in the current fiscal year from 3.2 percent three months ago to 1.4 percent now. The monthly Markit PMI survey for the Japanese manufacturing sector also indicated some improvement but ongoing contraction, with the headline index increasing from 47.2 in August to 47.7 in September.

The Markit PMI survey for the Indian manufacturing sector, in contrast, showed activity increased for the second consecutive month in September and at the fastest pace since 2012 as authorities continued to lift restrictions; the index rose from 52.0 in August to 56.8 in September with respondents reporting strong growth in output, new orders, and new export orders, further confidence about the outlook, but another month of payroll cuts.

Looking ahead*

On Friday in Asia/Pacific, Japanese unemployment and Australian retail sales figures are on the calendar. In Europe, the Eurozone HICP flash report is due. In North America, US employment, consumer sentiment, factory orders, and motor vehicle sales reports are on tap.

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