Daily market review

United States

President Trump's call for a bigger fiscal relief package gave equities a boost Friday but stocks trimmed gains headed into the close. The Dow Jones industrial index rose 0.6 percent, the S&P 500 gained 0.9 percent, and the NASDAQ rose 1.4 percent.

Trump said he favored a fiscal package larger than Republicans or Democrats are now considering, and said negotiations were "moving along." Senate Majority Leader Mitch McConnell, on the other hand, said no deal was likely before the November elections. News of rising Covid-19 cases weighed on sentiment but investors reacted favorably to more news from Gilead, up 0.8 percent, that its remdesivir medication speeded recovery from Covid-19.

M&A gave technology shares a lift, with chipmaker Xilinx up 14 percent on a report it may be acquired by Advanced Micro Devices, down 3.9 percent. Other chipmakers, including Qualcomm, up 2.1 percent, and Teradyne, up 4.4 percent, tracked Xilinx higher. Other tech leaders included Apple, up 1.7 percent, and software companies Microsoft, up 2.5 percent, and Salesforce.com, up 2.2 percent.

Amazon, up 3.0 percent, led consumer discretionary shares higher, with strength also evident in homebuilders and some retailers. Google, up 2.0 percent, and Netflix, up 1.4 percent, gave communications services a lift.

Weakness in airlines and in aerospace and defense weighed on industrials. Financials lagged, and energy was off the most on a pullback in oil services and oil supermajors. Among Dow stocks, IBM, down 2.8 percent, gave back some of its recent gains, and Amgen, the biotech, fell 1.4 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 61 cents to US$42.79 while spot gold rose US$34.63 to US$1928.32. The US dollar declined against most major currencies. The US Treasury 30-year bond yield was down 2 basis points to 1.57 percent while the 10-year note yield declined 1 basis point to 0.77 percent.


Positive comments on US fiscal relief from President Trump helped equities edge up Friday but gains were limited by concerns over the economic recovery. The Europe-wide STOXX 600 gained 0.6 percent, the German DAX firmed 0.1 percent, the French CAC rose 0.7 percent, and the export-heavy UK FTSE-100 also rose 0.7 percent.

Downbeat UK economic data and worrisome news on rising coronavirus infections in Europe and elsewhere remained in focus, and several European countries have imposed new restrictions in response.

On the positive side was a report that remdesivir, the anti-viral drug, was shown to cut recovery times in a new clinical study. In macro news, Bank of England Governor Andrew Bailey signaled willingness to implement new monetary stimulus if the pandemic hits the economy again.

Among European stock sectors, out-performing were travel & leisure, basic resources, technology, health care, and media. Lagging were autos, banks, construction, chemicals, utilities, and insurance.

Among companies in focus, Pandora A/S, the Danish jewelry-maker, rallied 17 percent after raising its guidance. Pricer, the Swedish price labeling business, rose 24 percent on upbeat quarterly results. Novo Nordisk, the Danish pharma, rose 3.3 percent on improved guidance.

In economic data, UK GDP expanded by a much weaker than expected 2.1 percent in August. This was the smallest rise since the recovery began back in May. Separately, UK goods producers had a weaker-than-expected August with overall industrial output rising just 0.3 percent on the month. Following an unrevised 5.2 percent jump in July, the weaker than expected mid-quarter increase only boosted annual growth from minus 7.4 percent to minus 6.4 percent.

Asia Pacific

Moves in major Asian markets were mixed but generally small Friday, though most finished with strong gains over the week. Australia's All Ordinaries index closed up 0.1 percent on the day but outperformed on the week with a 5.5 percent gain, while Hong Kong's Hang Seng index fell 0.3 percent on the day and rose 2.8 percent the week. Japan's Nikkei and Topix indices closed down 0.1 percent and 0.5 percent respectively on the day but advanced 2.6 percent and 2.4 percent respectively open the week. The Shanghai Composite index closed up 1.7 percent on Friday as trading resumed after more than a week of national holidays.

The Reserve Bank of India left its main policy rate rate unchanged at 4.00 percent at its policy review held Friday. Officials noted some signs of recovery in economic activity from the initial impact of the Covid-19 pandemic but also consider there to be both downside and upside risks to the growth outlook. They also noted that inflation has picked up above their target range of of 2.0 percent to 6.0 percent in recent months but attributed this to supply shocks associated with the impact of the pandemic and expressed confidence that price pressures will begin to ease in coming months. Reflecting this assessment, officials re-affirmed that supporting economic recovery from the pandemic remains their immediate priority and reiterated that they consider a fall in inflation would provide an opportunity to reduce rates further.

The Markit China PMI survey's business activity index for the services sector increased from 54.0 in August to 54.8 in September, indicating that activity in the sector expanded for the fifth consecutive month and at the fastest pace since June. With the manufacturing PMI survey, published last week, showing a small decline in its headline index from 53.1 to 53.0, but a somewhat bigger drop in its output index, together these resulted in the composite output index falling from 55.1 in August to a still-strong level of 54.5 in September. These surveys, along with official PMI surveys also published last week, suggest that the Chinese economy is continuing to stage a solid recovery from the initial impact of the Covid-19 pandemic.

Household spending in Japan rose 1.7 percent on the month in August, rebounding from a decline of 6.5 percent in July. while year-on-year growth picked up from a drop of 7.6 percent to a fall of 6.9 percent, close to the consensus forecast for a decline of 6.7 percent. The month-on-month fall in spending in July reflected the impact of a re-tightening of public health restrictions after new Covid-19 cases picked up in parts of the country, with some of these restrictions subsequently eased in August. Retail sales data released last week also showed a rebound in month-on-month growth in August.

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