Daily market review

United States

Equities edged down Wednesday with virus worries in focus and mixed earnings reports. The Dow Jones industrial index slipped 0.6 percent, the S&P 500 declined 0.7 percent, and the NASDAQ was off 0.8 percent.

The reflation trade, which was powered by expectations of a blue wave, appeared to falter as some analysts questioned the likelihood of a Democratic sweep to be followed by hefty economic stimulus.

Rebounding oil prices helped energy stocks hold up best, along with industrials on an uptick in airlines. Elsewhere, bank earnings results were mixed, while communications services lagged as telecom and the FAANGs fell back. Consumer staples and consumer discretionary shares lagged, with Amazon down 2.3 percent. REITS lagged the most.

Among companies reporting earnings, UnitedHealth, the insurer, retreated 3.0 percent despite topping expectations for earnings and revenues, as its operating margins were hurt by Covid-19 expenses. Wells Fargo dropped 6.0 percent and BankAmerica declined 5.3 percent on earnings disappointments, while Goldman Sachs saw blowout earnings on strong trading revenues but gave up morning gains to end up only 0.2 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 85 cents to US$43.34 while spot gold rose US$8.38 to US$1,902.07. The US dollar weakened against major currencies. The US Treasury 30-year bond yield declined 1 basis point to 1.50 percent while the 10-year note yield was flat at 0.72 percent.


Pandemic worries held back equities again on Wednesday. The Europe-wide STOXX 600 declined 0.1 percent, the German DAX rose 0.1 percent, the French CAC declined 0.1 percent, and the export-heavy UK FTSE-100 eased 0.6 percent.

Virus news remained in focus as authorities in the UK, France, the Netherlands, and elsewhere were poised to impose new restrictions as cases reaccelerated across Europe. UK stocks lagged as sterling popped up on news that UK-EU negotiations on a Brexit deal would be extended past their latest deadline.

Among stock sectors, underperformers included health care, food & beverage, retail, real estate, telecom, media, and banks. Holding up best were utilities, oil & gas, basic resources, industrials, and construction.

Among companies in the news, ASML, the Dutch chipmaker, slipped 1.0 percent despite topping market expectations for earnings and revenues. AstraZeneca, the big pharma, fell 3.2 percent despite news of large orders for its expected Covid-19 vaccine. Melia Hotels fell 5.7 percent after a downgrade at Deutsche Bank. On the positive side, Just Eat Takeaway, the food deliverer, rose 6.4 percent and Stock Spirits Group, the UK drinks company, rose 5.3 percent, on positive trading updates.

Asia Pacific

Major Asian markets posted mixed results Wednesday, though moves were generally small, with the regional data calendar relatively light and ongoing Covid-19 developments doing little to shift investor sentiment. The Shanghai Composite index was among the weaker performers in the region, closing down 0.6 percent, while Australia's All Ordinaries index fell 0.2 percent. Japan's Nikkei and Topix indices rose 0.1 percent and fell 0.3 percent respectively, while Hong Kong's Hang Seng index closed flat on the day after a tropical storm halted trading Tuesday.

Advance estimates for third-quarter Singapore GDP show that activity rebounded at a solid pace after the sharp contraction during the initial impact of the pandemic. GDP rose 7.9 percent on the quarter after falling 13.3 percent in the second quarter. Stronger growth was recorded in all major sectors of the Singapore economy as public health restrictions were eased.

India's wholesale price index rose 1.32 percent on the year in September, picking up from an increase of 0.16 percent in August, and rose 0.99 percent on the month after advancing 0.91 percent previously. The increase in price pressures was broad-based across major components, including manufactured goods, food, and fuel. Consumer price inflation data released earlier in the week showed an increase in headline inflation from 6.69 percent in August to 7.34 percent in September, further above the top of the Reserve Bank of India's target range of 2.0 to 6.0 percent.

Looking ahead*

On Thursday in Asia/Pacific, Australian labour force, Chinese CPI and PPI figures are on tap. In Europe, Swiss producer and import prices and French CPI reports are due. In North America, US jobless claims, Philadelphia Fed manufacturing, Empire State manufacturing, and US export and import price reports on tap.

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