Daily market review

United States

Dip-buying led a rebound in growth/momentum stocks Wednesday after several days of relative weakness while cyclicals gave up some recent gains. The Dow Jones industrial index eased 0.1 percent, the S&P 500 rose 0.8 percent, but the NASDAQ 100 gained 2.0 percent.

Profit-taking weakened cyclicals even as expectations continue for vaccines to help growth perk up in 2021. Among sectors, technology and consumer discretionary shares led the winners while energy, industrials, and financials lagged. Consumer staples outperformed, led by discount retailers and household & personal care stocks, as defensive plays were in favor, with Walmart up 1.7 percent.

Among the day's leaders were the heavily-weighted FAANGs, plus Qualcomm, up 5.4 percent, on news it will team with Dish Network. Zoom, the online meeting company, rebounded by 10 percent after its selloff Tuesday. In the consumer discretionary sector, Chipotle gained 5 percent, after the Mexican food chain unveiled its facilities for pickup and delivery orders only. McDonalds gained 2.2 percent as the market liked its plans for faster drive-through service.

On the downside, Datadog, the software company, fell 6.2 percent, as the market disliked its cautious guidance, despite strong results. Software company eGain was down 28 percent on disappointing quarterly results.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 24 cents to US$43.87 while spot gold fell US$8.93 to US$1,864.53. The US dollar rose against most major currencies. The US Treasury 30-year bond yield was unchanged at 1.75 percent while the 10-year note yield rose 3 basis points to 0.98 percent.


Ongoing response to positive vaccine news and supportive comments from the European Central Bank lifted equities Wednesday. The Europe-wide STOXX 600 rose 1.1 percent, the German DAX rose 0.4 percent, the French CAC gained 0.5 percent, and the UK FTSE-100 rose 1.4 percent.

Risk appetite remained good after Monday's news from Pfizer and BioNTech on the high efficacy of their Covid-19 vaccine. New support came Wednesday from ECB President Christine Lagarde's comments suggesting the ECB would consider more asset purchases and low-cost lending as part of its policy review in December. Separately, a Bank of Spain economist called for more ECB action to prevent deflation.

On the negative side, gains in Covid-19 cases, hospitalizations, and deaths, and continued lockdowns limited the market's upside, along with concerns that vaccine uptake may be limited by public skepticism.

Among sectors, best performers included utilities, real estate, personal & household goods, health care, retail, travel & leisure, and technology. Lagging were insurance, media, construction, banks, industrials, oil & gas, autos, and chemicals.

Among companies in focus, ABN Amro dropped 5.6 percent on earnings disappointment while Nordea Bank fell 5.1 percent after a large sale of its shares by Sampo, the Finnish insurer. On the positive side, Bechtle, the German IT company, rose 13 percent after raising its guidance. Home24, the German online shopping company, gained 12 percent on an earnings beat.

Asia Pacific

Major Asian markets posted mixed results Wednesday, with tech-heavy markets underperforming after the NASDAQ's decline Tuesday but strong gains elsewhere in the region as investors gain confidence about the prospects for a Covid-19 vaccine to support economic recovery. Japan's Nikkei and Topix indices advanced 1.8 percent and 1.7 percent respectively, while Australia's All Ordinaries index closed up 1.6 percent. The Shanghai Composite index and Hong Kong's Hang Seng index, however, fell 0.5 percent and 0.3 percent respectively, reflecting large declines in shares of major tech companies including Alibaba and Tencent. This followed an announcement by Chinese authorities late Tuesday indicating there may be tighter curbs on anti-competitive practices in the tech sector.

The Reserve Bank of New Zealand left its official cash rate unchanged at 0.25 percent at its meeting Wednesday, in line with the consensus forecast, and also kept the upper limit for its asset purchase program at NZ$100 billion as part of ongoing efforts to keep domestic interest rates low. Officials agreed, however, that further monetary stimulus was warranted in the form of a new lending facility that will provide domestic banks and other eligible financial entities with long-term low-cost funding in order for them to provide lending to businesses and households. Officials also reaffirmed that the economic impact of the Covdi-19 pandemic will keep inflation below target for an extended period and that they are prepared to provide additional policy support if required.

Looking ahead*

On Thursday in Asia/Pacific, Japanese machinery orders, Japanese PPI, Indian CPI, and Indian industrial production reports are scheduled. In Europe, German CPI, UK GDP, UK industrial production, UK merchandise trade, UK monthly GDP, and Eurozone industrial production reports are due. In North America, Fed Chair Jay Powell will speak, plus reports on US CPI, US jobless claims, and the US Treasury budget statement are on tap.

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