Daily market review

United States

Equities were narrowly mixed in uncertain trading Friday, with weakness in energy and technology stocks offsetting a better showing in financials, materials, health care, and consumer discretionary. The Dow Jones industrial index eased 0.1 percent, the S&P 500 firmed 0.3 percent, and the NASDAQ rose 0.4 percent.

Intel, off 11 percent, led tech stocks down after issuing weaker guidance. Energy stocks fell on a selloff in crude oil prices, with Chevron off 1.1 percent and driller Apache down 1.7 percent.

Among financials, Capital One, up 1.6 percent, and KeyBank, up 2.8 percent, benefited from lower provisioning for credit losses, while SVB Financial, up 4.0 percent, saw improved fee income. On the negative side, market heavyweight American Express fell 3.6 percent on an unusual earnings miss reflecting low spending on travel and entertainment.

On the positive side, health care outperformed, with United Health up 1.5 percent. Google, up 1.6 percent, and Facebook, up 2.4 percent, led communications services higher as the market is anticipating strong earnings despite regulatory worries.

Among companies in the news, Boston Brewing surged 18 percent on blowout quarterly earnings, with growth led by sales of alcoholic seltzer. Mattel, the toymaker, rallied 9.6 percent as the pandemic evidently boosted demand for toys.

Macroeconomic news provided minimal direction Friday as US fiscal stimulus talks appeared stalled. Thursday's presidential election debate was considered a draw. Markets generally expect a strong Democratic showing to be followed by aggressive spending to boost the economy in the first quarter.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 85 cents to US$41.65 while spot gold fell US$1.01 to US$1903.51. The US dollar declined against most major currencies but rose vs. sterling. The US Treasury 30-year bond yield fell 4 basis points to 1.64 percent while the 10-year note yield was down 3 basis points at 0.84 percent.


Upbeat earnings and hopes for a Brexit compromise gave equities a boost Friday. The Europe-wide STOXX 600 rose 0.6 percent, the German DAX gained 0.8 percent, the French CAC gained 1.2 percent, and the UK FTSE-100 was up 1.3 percent.

In Brexit news, comments from French President Emmanuel Macron suggested scope for agreement on a Brexit pact, and talks were to continue over the weekend. Separately, the UK signed a trade accord with Japan. Markets also drew support from expectations for the European Central Bank to signal more monetary policy stimulus, following on from the UK's expansion of its fiscal stimulus program this week. On the negative side, Covid-19 cases in Europe continued to accelerate, with infections more than doubling in the last 10 days.

Among big-name companies reporting positive earnings surprises: Barclays, up 8.7 percent, Nordea, up 1.4 percent, to lead banks higher, while Daimler rose 1.0 percent and Accor, the French hotel chain, rose 3.6 percent after topping expectations. L'Oreal, the French cosmetics giant, rose 1.2 percent, and Norsk Hydro, the energy and commodities company, rose 6.6 percent. Airbus rose 5.5 percent after projecting a post-pandemic recovery.

On the downside, ABB, the Swiss engineering firm, fell 1.7 percent after warning of ongoing weakness. Luxury goods conglomerate Kering declined 0.9 percent on news of disappointing sales in its Gucci unit.

Asia Pacific

Moves in major Asian markets were mixed on the day Friday, with performance also diverging on the week. Global Covid-19 developments and prospects for US fiscal stimulus remain the main near-term focus for regional investors. The Shanghai Composite index underperformed on both the day and on the week with declines of 1.0 percent and 1.7 percent respectively, while Hong Kong's Hang Seng index outperformed with gains of 0.5 percent and 2.2 percent respectively. Moves elsewhere were relatively subdued. Japan's Nikkei and Topix indices rose 0.2 percent and 0.5 percent respectively on the day and both closed the week up 0.5 percent. Australia's All Ordinaries index fell 0.2 percent on both the day and on the week.

Flash PMI survey data for Japan published Friday indicate that the ongoing impact of the Covid-19 pandemic on the domestic economy has remained substantial during October, with aggregate activity still contracting at a significant pace that was little different to that recorded in September. The flash estimate for the headline manufacturing index for October is 48.0, up slightly from the final estimate of 47.7 for September, while the flash estimate for the manufacturing output index is 47.0, down from 46.0 previously. The flash estimate for the service sector business activity index is 46.6, down from the final estimate of 46.9 for September. Together these give a flash estimate for the composite output index for October of 46.7, up only slightly the final estimate of 46.6 for September.

Japanese inflation data released today showed price pressures remained subdued in September and suggest that progress towards the Bank of Japan's 2.0 inflation target remains slow. The headline consumer price index was unchanged on the year in September, weakening from an increase of 0.2 percent in August, many reflecting a moderation in food priced inflation. Core CPI, which excludes fresh food prices, fell 0.3 percent in September after dropping 0.4 percent in August, close to the consensus forecast for a decline of 0.4 percent, while the BoJ's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, was also unchanged on the year in September after falling 0.1 percent in August.

Singapore's headline consumer price index was unchanged on the year in September after falling 0.4 percent in August, and rose 0.3 percent on the month after advancing 0.6 percent previously. The Monetary Authority of Singapore's preferred measure of core inflation, which excludes the cost of accommodation and private road transport, showed slightly stronger underlying price pressures, with this index falling 0.1 percent on the year after dropping 0.3 percent in August and increasing 0.2 percent on the month after rising 0.1 percent previously.

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