Daily market review

United States

Renewed hopes for US fiscal stimulus helped equities bounce back Wednesday as President Trump called for targeted fiscal support. Both the Dow Jones industrial index and NASDAQ rose 1.9 percent while the S&P 500 gained 1.7 percent.

Trump called late Tuesday for support for small businesses, airlines, and $1,200 direct unemployment payments, a partial reversal of his tweet Tuesday afternoon ordering no more negotiations on federal spending until after the November elections. Meanwhile, comments from House Speaker Nancy Pelosi suggested near-term prospects for fiscal action remain uncertain. Some investors are looking past Jan. 1 to anticipate stronger fiscal support from a new Democratic administration.

Cyclicals and small-cap stocks led Wednesday's rebound, with gains nearly across the board, led by materials, industrials, and consumer discretionary. Defensive sectors lagged, along with energy and communications services.

Among companies in focus, American Airlines, up 4.3 percent, and other airlines soared on Trump's call for support, along with Boeing which gained 3.2 percent to lead the Dow higher. Other transports rallied, including car rental leader Avis Budget, up 5.4 percent, and FedEx, up 3.5 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 1 cent to US$42.08 while spot gold fell US$1.65 to US$1,887.27. The US dollar declined against most major currencies. The US Treasury 30-year bond yield rose 5 basis points to 1.59 percent while the 10-year note yield rose 5 basis points to 0.79 percent.


Equities were mixed to lower Wednesday with uncertainty about US fiscal stimulus offsetting positive company news. The Europe-wide STOXX 600 slipped 0.1 percent, the German DAX percent rose 0.2 percent, the French CAC declined 0.3 percent, and the UK FTSE-100 declined 0.1 percent.

Among sectors, health care, real estate, media, and telecom showed particular weakness, while out performers included basic resources, autos & parts, chemicals. Basic resources reflected an uptick in copper prices, with Glencore up 2.8 percent.

Among companies in focus, giant brewers Anheuser-Busch Inbev rose 1.9 percent and Heineken gained 3.2 percent on an analyst upgrade. Deutsche Post DHL rose 3.8 percent on a positive earnings surprise and higher guidance. On the downside, 4D Pharma, the UK biotech, dropped 37 percent on disappointing clinical results.

In economic data, the goods producing sector lost a little ground in August as output dipped 0.2 percent following, however, upward revised strength in July of 1.4 percent. Annual growth slipped from minus 9.8 percent to minus 10.0 percent and production was left 10.8 percent below its pre-lockdown level in February.

Asia Pacific

Major Asian markets posted mixed results Wednesday, with the regional data calendar light and large declines on Wall Street Tuesday appearing to have little impact on regional sentiment.

Australia's All Ordinaries index outperformed with an increase of 1.2 percent after the Australian government promised additional fiscal stimulus and expressed confidence that economic growth and the country's fiscal position will improve next year. Japan's Nikkei and Topix indices were both little changed while Hong Kong's Hang Seng index posted a solid gain, advancing 1.1 percent on the day.

September's PMI indicates that Hong Kong's economy contracted at a less pronounced rate, increasing to 47.7 from 44.0 in August. Authorities eased some public health restrictions in September after they were tightened in August and July, though weak external demand remains a major drag on activity. Respondents reported smaller declines in output and new orders in September and another decline in new export orders, largely reflecting weak demand from mainland China.

Looking ahead*

On Thursday in Asia/Pacific, Chinese Caixin PMI figures are on the calendar. In Europe, Swiss unemployment and German merchandise trade reports are due, along with ECB policy minutes. In North America, Canadian housing starts and US jobless claims reports are on tap.

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