Daily market review

United States

Weakness in cyclicals offset a better showing in mega-cap growth stocks to weaken most major stock indexes Tuesday, though the NASDAQ outperformed. The Dow Jones industrial index declined 0.8 percent, the S&P 500 slipped 0.3 percent, while the NASDAQ rose 0.6 percent.

Worrisome Covid-19 news and lack of progress in US fiscal talks dampened hopes for recovery and kept cyclicals on the defensive. Financials, industrials, and energy were among the day's worst performers.

Caterpillar, down 3.2 percent, and 3M, down 3.1 percent, topped market expectations but could not furnish earnings guidance in light of pandemic uncertainties. Stanley Black & Decker was off 3.8 percent despite an earnings beat. Airlines were hit by virus worries, with American Airlines off 4.8 percent and Delta down 3.9 percent.

Technology stocks outperformed led by chipmaker Xilinx, up 8.6 percent after news it will be acquired by Advanced Micro Devices. Mega-caps limited the overall declines, with Facebook up 2.2 percent, Google up 0.9 percent, and Apple up 1.4 percent. Amazon rose 2.5 percent and Zoom Video rose 4.1 percent, as they are viewed as benefiting from the stay-at-home trade.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 81 cents to US$41.14 while spot gold rose US$5.38 to US$1,907.65. The US dollar declined against most major currencies. The US Treasury 30-year bond yield fell 3 basis points to 1.56 percent while the 10-year note yield was down 3 basis points at 0.78 percent.


Rising coronavirus infections and hospitalizations in the US and Europe hit equities again Tuesday. The Europe-wide STOXX 600 fell 1.0 percent, the German DAX lost 0.9 percent, the French CAC dropped 1.8 percent, and the UK FTSE-100 was down 1.1 percent.

Record increases in Covid-19 cases and political conflict over new lockdown measures in the UK, Italy, France, and elsewhere added to risk-off pressure. Among sectors, autos, energy, and retail lagged the most, while technology, chemicals, and personal & household goods held up best.

Among companies reporting, HSBC rose 3.4 percent after topping earnings and revenues expectations, and suggesting the outlook is improving. Capgemini, the French consulting and technology firm, rose 2.1 percent as revenues accelerated on rising demand for cloud and digital services.

On the downside, Banco Santander declined 1.5 percent despite earnings and revenues beats, reflecting the broader market selloff. BP declined 1.7 percent after reporting better than expected though still dismal results, and warning of uncertain market conditions. Novartis declined 2.9 percent after a revenues miss. Rolls-Royce declined 3.1 percent amid reports of pending staff layoffs.

Asia Pacific

Most major Asian markets closed lower or were little changed Tuesday after losses on Wall Street Monday. Australia's All Ordinaries index fell particularly sharply, closing down 1.8 percent on the day, while Hong Kong's Hang Seng index dropped 0.6 percent despite strong gains in shares of major bank HSBC. Moves elsewhere were more subdued. Japan's Nikkei and Topix was unchanged and down 0.1 percent respectively, while the Shanghai Composite index closed up 0.1 percent.

New Zealand's merchandise trade balance deficit widened from NZ$282 million in August to NZ$1,017 million in September. Exports of goods fell 8.0 percent on the year in after increasing 8.6 percent in August, largely driven by weaker dairy exports and weak demand across most major trading partners, including China, Australia, Japan, and the European Union. Imports of goods fell 11.4 percent on the year in September after a decline of 17.7 percent in August.

Looking ahead*

On Tuesday in Asia/Pacific, the Australian CPI report is scheduled. In Europe, the Italian PPI report is due. In North America, the Bank of Canada policy announcement is scheduled, along with reports on US international trade in goods and US retail and wholesale inventories.

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