Daily market review

United States

Mega-caps helped power equities higher Thursday as investors bought the dip following days of steep declines, with support from upbeat earnings. The Dow Jones industrial index rose 0.5 percent, the S&P 500 gained 1.2 percent, and the NASDAQ gained 1.6 percent.

Apple, up 3.7 percent, led the rebound, along with Facebook up 4.9 percent, Google up 3.3 percent, Twitter up 8.1 percent, and Amazon up 1.5 percent. Among companies reporting earnings beats: CBRE, the big commercial real estate company, rallied 17 percent; Tapestry, the luxury fashion company, rose 6.1 percent; and defense contractor Martin Marietta rose 6.5 percent.

Other old-line companies reporting strong results included Ford, up 2.3 percent after topping market expectations on accelerating light truck sales, and Caterpillar, up 2.3 percent. Lagging were health care names UnitedHealth, down 1.3 percent, and Walgreens, down 3.1 percent. Abiomed, the medical devices maker, fell 10 percent despite earnings and revenues beats as the market found its guidance disappointing.

In US economic news, GDP rose at a 33.1 percent annual rate in the third quarter versus expectations for 30.9 percent and compared with second-quarter contraction of 31.4 percent. Consumer spending surged to a 40.7 percent annual rate to contribute 25.27 percentage points to headline growth. Separately, weekly jobless claims fell largely as expected, down 40,000 to 751,000 in the October 24 week for the lowest total yet of the crisis.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.19 to US$37.90 while spot gold fell US$6.46 to US$1,871.17. The US dollar rose sharply against most major currencies. The US Treasury 30-year bond yield was steady at 1.56 percent while the 10-year note yield was unchanged at 0.78 percent.


Equities ended flat to weaker Thursday in seesaw trading with pandemic worries in focus amid mixed earnings and monetary policy news. The Europe-wide STOXX 600 eased 0.1 percent, the German DAX gained 0.3 percent, while the French CAC and the UK FTSE-100 were unchanged.

On the pandemic front, France and Germany declared one-month lockdowns, and other countries were expected to follow suit. The UK, Italy, and Spain have reported record infection levels, and they are likely to announce new restrictions soon to limit the spread.

Risk appetite initially suffered when the European Central Bank left policy unchanged, but investors reacted more favorably when ECB President Christine Lagarde appeared to signal easing ahead. Lagarde said ECB economists "are already at work" in adjusting forecasts to reflect the acceleration of Covid transmission throughout the Eurozone. "On the basis of this updated assessment, the Governing Council will recalibrate its instruments, as appropriate, to respond to the unfolding situation," she said.

Markets were bolstered by oversold technical conditions after Wednesday's steep selloff. On a busy earnings day, results were mixed with energy shares bolstered by an earnings beat from Royal Dutch Shell, up 3.6 percent, and tech shares lifted by ASML, up 2.2 percent, after the Dutch chipmaker raised guidance. On the downside, Nokia, the Finnish telecom equipment maker, plunged 20 percent after cutting guidance. Among banks, Credit Suisse fell 5.3 percent and Standard Chartered was off 7.7 percent, both on earnings misses.

Among sectors, outperformers included travel & leisure, real estate, oil & gas, and technology, while lagging were telecom, media, utilities, financials, and health care.

Asia Pacific

Most major Asian markets closed lower Thursday, with declines on Wall Street and concerns about rising global Covid-19 cases once again the major factors weighing on regional investor sentiment. The Shanghai Composite was the best performer with only a 0.1 percent gain. Australia's All Ordinaries index was the worst performer in the region, closing down 1.5 percent with Hong Kong's Hang Seng index falling 0.5 percent and Japan's Nikkei and Topix dropping 0.4 percent and 0.1 percent respectively.

The Bank of Japan's Monetary Policy Board left policy settings on hold in line with consensus forecasts. As it has been since early 2016, the BoJ's short-term policy rate for excess reserves remains at minus 0.1 percent while the target level for the long-term 10-year yield remains at around zero percent. Officials also kept the BoJ's asset purchase program and lending facilities in place and retained their forward guidance that policy will remain accommodative for the foreseeable future.

The BoJ's growth and inflation forecasts, in quarterly updates, were mixed compared to the prior assessments. The median forecast for GDP is a decline of 5.5 percent in fiscal year 2020 compared with their previous forecast for a 4.7 percent decline, followed by an increase by 3.6 percent in fiscal year 2021, up from the previous forecast of 3.3 percent. The core consumer price index is now forecast to fall by 0.6 percent in fiscal year 2020 and then increase by 0.4 percent in fiscal year 2021.

Looking ahead*

On Friday in Asia/Pacific: Japanese unemployment rate, Japanese industrial production, Australian PPI reports, and Hong Kong GDP are scheduled. Data from Europe: Eurozone GDP flash, Eurozone HICP flash, Eurozone unemployment rate; French GDP flash, French consumer manufacturing goods consumption, French CPI; Swiss retail sales, Swiss leading indicator; Italian CPI and Italian GDP. In North America: Canadian industrial product price index, Canadian monthly GDP, US personal income and spending, US employment cost index, Chicago PMI, and US consumer sentiment figures are on tap.

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