Daily market review

United States

Equities pared sharp early losses to end flat to lower Thursday, but markets remained on the defensive in response to spiking virus cases in Europe and fading hopes for US fiscal action. The Dow Jones industrial index eased 0.1 percent, the S&P 500 declined 0.2 percent, and the NASDAQ was off 0.5 percent.

Equities started the day much lower in risk-off mode with European markets hit by new public health restrictions amid rising virus counts. Disappointing US jobless claims figures contributed to perceptions that the job market is slowing which added to risk-off sentiment in the US morning.

Technology and growth stocks lagged while value held up better, with help from upbeat earnings at Walgreens, up 4.8 percent, and Morgan Stanley, up 1.3 percent. Dow heavy-weight JP Morgan was up 1.5 percent.

Momentum stocks were hurt after Fastly, the cloud computing company, downgraded its third-quarter sales revenues guidance. Fastly fell 27 percent. Megacaps trailed, with Apple off 0.4 percent, and Microsoft down 0.5 percent, though both ended well up from the day's lows. Chipmakers suffered in the selloff, with ASML down 2.9 percent.

Among sectors, communications services trailed, with Facebook off 1.9 percent. Materials lagged on weakness in industrial metals and materials. Pharma dragged on health care. On the plus side, energy outperformed, with energy services leading. Banks helped boost financials, drug stores lifted consumer staples, and real estate topped the outperformers.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 19 cents to US$43.15 while spot gold rose US$4.59 to US$1,906.66. The US dollar rose sharply against major currencies. The US Treasury 30-year bond yield was unchanged at 1.51 percent while the 10-year note yield was flat at 0.73 percent.


Surging European virus infections and waning expectations for US fiscal support hit equities hard on Thursday. The Europe-wide STOXX 600 dropped 2.1 percent, the German DAX fell 2.5 percent, the French CAC fell 2.1 percent, and the UK FTSE-100 was off 1.7 percent.

Restaurant and hospitality shares suffered as France, Germany, and the UK moved to re-impose limited restrictions. Marston's, the UK pub chain, fell 1.6 percent after announcing layoffs. Whitbread, the hotel and restaurant company, fell 3.0 percent. Energy shares suffered as oil prices dropped, with Royal Dutch Shell off 3.6 percent and BP down 2.9 percent.

Among stock sectors, laggards fell 2-3 percent, paced by oil & gas, utilities, insurance, technology, autos, health care, chemicals, construction, retail, and basic resources. Holding up best but still lower were real estate, travel & leisure, banks, telecom, and media.

Among companies in the news, BMW dropped 2.9 percent on reports it's recalling hybrid vehicles due to a fire hazard. On the positive side, Elringklinger, the German car parts maker, rose 28 percent on news it would work with Airbus on fuel cells.

Asia Pacific

Most major Asian markets closed lower Thursday, with concerns about the prospects of additional US fiscal stimulus and a re-tightening of public health restrictions in Europe weighing on regional sentiment. Hong Kong's Hang Seng index was among the worst performers, closing down 2.1 percent, while Japan's Nikkei and Topix indices fell 0.5 percent and 0.7 percent, respectively, and the Shanghai Composite index closed down 0.3 percent. Australia's All Ordinaries index defied the regional trend, closing up 0.4 percent after comments from Reserve Bank of Australia Governor Philip Lowe reiterating that officials are considering further easing of monetary policy.

Conditions in Australia's labour market weakened in September after strong improvement in August, with employment falling and the unemployment rate picking up. The number of employed in Australia fell by 29,500 in September after an increase of 111,000 in August with both full-time and part-time jobs declining.

China's CPI slowed to 1.7 percent on the year in September, down from 2.4 percent in August and below the consensus forecast of 1.9 percent. Weakness reflected a smaller increase in food prices amid broadly offsetting moves among other major categories. China's producer price index fell 2.1 percent on the year in September after dropping 2.0 percent in August, a bigger decline than the consensus forecast for a fall of 1.8 percent.

Looking ahead*

On Thursday in Asia/Pacific, Singapore merchandise trade figures are on tap. In Europe, Italian CPI, Eurozone HICP, Eurozone merchandise trade, and Italian merchandise trade reports are due. In North America, Canadian manufacturing sales, US retail sales, US industrial production, US business inventories, US consumer sentiment, and US Treasury international capital reports are on tap.

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