Daily market review

United States

Equities were flat to lower Friday on mixed corporate results and profit-taking pressures after the week's big gains. The Dow Jones industrial index eased 0.2 percent and the S&P 500 and NASDAQ 100 were flat.

The week's run-up in stock prices faded before the weekend as buyers stepped back and uncertainty remained over the election outcome. Vote counting continued in key states, and investors were bracing for turbulence as President Trump pursues challenges to the outcome.

Among sectors, weakness in consumer discretionary stocks weighed on the market, with Amazon off 0.3 percent, and homebuilders off, including KB Home, down 3.6 percent, and Pulte, down 4.2 percent. Energy stocks lagged as oil prices fell, with Apache, the driller, down 4.9 percent, and ConocoPhilips off 3.1 percent.

With mega-caps retreating from recent sharp gains, communications services and technology lagged. Industrials lagged with airlines hurt by renewed virus worries, and truckers falling back. Holding up best were materials, health care, and consumer staples. Among consumer staples, drug stores gained, with CVS up 5.8 percent after topping earnings and revenues expectations.

Among companies reporting, T-Mobile advanced 5.4 percent after an earnings beat. On the downside, Peloton slipped 0.9 percent despite surging profits and revenues as the home exercise business warned it was having trouble meeting customer demand. Electronic Arts, the video game company, dropped 7.1 percent after missing revenues expectations and guiding lower.

In economic news, the US jobs report was better than expected in October, led by a 638,000 rise in nonfarm payrolls that beat expectations for 575,000. The unemployment rate also did better than expected, falling a full percentage point to 6.9 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 96 cents to US$39.73 while spot gold rose 71 cents to US$1,951.52. The US dollar dropped against most major currencies but rose vs. the Australian dollar. The US Treasury 30-year bond yield rose 7 basis points to 1.60 percent while the 10-year note yield rose 5 basis points to 0.82 percent.


Equities gave up some of the week's big gains Friday as virus worries came back into focus. The Europe-wide STOXX 600 eased 0.2 percent, the German DAX declined 0.7 percent, the French CAC fell 0.5 percent, and the UK FTSE-100 firmed 0.1 percent.

Airlines suffered, with EasyJet down 2.6 percent after announcing more cutbacks in flights in response to lockdowns in UK, France, and Germany. Lufthansa fell 6.2 percent on concerns about travel restrictions. Automakers gave back some of the week's gains on hopes for better trade relations under a Biden presidency. Daimler fell 1.2 percent and Peugeot fell 1.7 percent.

On the plus side, miners outperformed as commodities prices have perked up on recent dollar weakness. Glencore rose 3.6 percent, Arcelor Mittal rose 4.3 percent, and Rio Tinto rose 2.9 percent. Insurance stocks gained on a surprisingly positive earnings report from Allianz, up 1.3 percent.

Among other companies reporting, Rheinmetall, the technology business, fell 3.1 percent on an earnings beat while Richemont, the luxury goods maker, rose 10.6 percent on an earnings beat and news of a partnership with Alibaba, the online Chinese marketplace.

Asia Pacific

Most major Asian markets closed higher Friday after Wall Street advanced further Thursday, with strong gains recorded across the region over the week. The regional data calendar was light Friday, with investor focus still on US election results and the FOMC decision. Japan's Nikkei and Topix indices rose 0.9 percent and 0.5 percent respectively on the day and 4.3 percent and 5.0 percent respectively on the week. Hong Kong's Hang Seng index was little changed on the day, up just 0.1 percent, but outperformed on the week with a 6.7 percent gain, while Australia's All Ordinaries index rose 0.8 percent on the day and 4.3 percent on the week. The Shanghai Composite index underperformed on both the day and the week with a fall of 0.2 percent and an increase of 2.7 percent respectively.

The Reserve Bank of Australia published its quarterly Statement on Monetary Policy Friday, updating growth and inflation forecasts after policy rates were cut by 15 basis points to a new record low of 0.10 percent at its monthly meeting earlier in the week. Officials now expect Australia's economy will contract in the second half of 2020 to a lesser extent than previously forecast and expand in the first half of 2021 at a slightly faster pace. Price pressures are now forecast to be weaker than previously expected until mid-2021, with CPI inflation still expected to be below the RBA's target range of 2.0 percent to 3.0 percent at the end of 2022. Today's statement reaffirms that officials do not expect to raise rate for at least another three years but also makes explicit their view that rates should not be lowered further into negative territory, with officials instead advising that they will prefer to adjust the level of government bond purchases as their main policy tool in the period ahead.

Household spending in Japan rose 3.8 percent on the month in September, picking up from an increase of 1.7 percent in August. Year-on-year growth, however, weakened from a drop of 6.9 percent to a fall of 10.2 percent, worse than the consensus forecast for a decline of 8.5 percent. The strong month-on-month increase in spending in September was largely driven by stronger spending on food and utilities but contrasts with retail sales data published last week which showed a small month-on-month decline, though both indicators show bigger year-on-year declines.

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