Daily market review

United States

Renewed hopes for a US fiscal deal supported equities Tuesday with energy stocks leading, but major indexes nevertheless ended down from midafternoon highs. The Dow Jones industrial index gained 0.4 percent, the S&P 500 rose 0.5 percent, and the NASDAQ was up 0.3 percent.

On the fiscal talks, House Speaker Nancy Pelosi said there was no deadline for an agreement, though she suggested that a deal could come by Nov. 1. Meanwhile, coronavirus news was mixed, with cases rising around the country offset by better news on the vaccine front. US biotech Moderna said it could get permission to roll out its vaccine in December, and AstraZeneca's North American vaccine trials are expected to resume soon.

Among sectors, financials, consumer discretionary, and communications services joined energy in beating the market. Regional banks led financials higher on positive earnings, with Regions Financial up 4.9 percent and Comerica up 4.8 after earnings beats. Travelers rose 5.4 percent after topping expectations for earnings and revenues.

Among energy stocks, exploration and production companies led gainers. Apache, the driller, rose 6.1 percent, and Haliburton, the oilfield servicer, rose 4.6 percent. Mega-cap internet stocks advanced, with Facebook up 2.4 percent and Google up 1.4 percent. Google gained despite the Department of Justice filing antitrust action against the search engine leader.

In US economic news, housing permits jumped 5.2 percent in September to a 1.553 million annual rate that was near the top of Econoday's consensus range in a report led by wide strength led for single-family homes, with relative weakness for multi-family housing.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 57 cents to US$42.97 while spot gold rose US$8.31 to US$1,910.13. The US dollar declined against major currencies. The US Treasury 30-year bond yield rose 4 basis points to 1.60 percent while the 10-year note yield was up 3 basis points at 0.79 percent.


Equities were mixed to weaker Tuesday after rising Covid-19 cases forced new regional lockdowns in Europe, and Brexit uncertainty remained high. The Europe-wide STOXX 600 declined 0.4 percent, the German DAX fell 0.9 percent, the French CAC was flat, and the UK FTSE-100 firmed 0.1 percent.

On a busy earnings day, results were mostly supportive. Logitech, the Swiss computer peripherals maker, was the day's big winner, up 16 percent on an earnings beat. Lufthansa rose 4.4 percent and UBS rose 2.7 percent on positive earnings reports. Real Estate Investors, the UK REIT, rose 5 percent after announcing new share buybacks.

Among sectors, technology, health care, chemicals, oil & gas, and basic resources lagged the market while outperformers included banks, travel & leisure, retail, real estate, and media.

Asia Pacific

Major Asian markets posted mixed results Tuesday, with regional investors still largely focused on external factors, most notably the prospects for US fiscal stimulus and concerns about rising Covid-19 cases in Europe. The Shanghai Composite index outperformed others with an increase of 0.5 percent after Chinese officials left the loan prime rate on hold, while Japan's Nikkei and Topix indices fell 0.4 percent and 0.8 percent respectively. Australia's All Ordinaries index dropped 0.6 percent.

The People's Bank of China left its one-year loan prime rate unchanged at 3.85 percent at its monthly review, with the equivalent five-year rate, at 4.65 percent, also unchanged. This suggests that officials remain comfortable for now with the degree to which monetary policy is supporting domestic activity. Activity data published earlier in the week indicated that China's economy continued to recover strongly in September from the initial impact of the pandemic early in the year.

The Reserve Bank of Australia published minutes of its October 6 meeting when the main policy rate was left unchanged at a record low of 0.25 percent, where it will stay, based on the minutes, until officials see strong evidence of a tight labor market and a return of inflation to their target range of 2.0 to 3.0 percent, conditions they do not expect to be met "for at least three years".

Looking ahead*

On Wednesday in Europe, UK public sector finances, UK CPI, and UK PPI reports are due. In North America, Canadian CPI, Canadian retail sales, and the Fed Beige Book report are on tap.

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