Daily market review

United States

Better buying in mega-cap growth stocks gave equities a modest boost Thursday while cyclicals recovered to edge higher on US fiscal stimulus hopes. The Dow Jones industrial index rose 0.2 percent, the S&P 500 gained 0.4 percent, and the NASDAQ 100 was up 0.9 percent.

The afternoon impetus came from a report that Senate Minority Leader Chuck Schumer and Senate Majority Leader Mitch McConnell have agreed to resume talks on a stimulus package.

Among sectors, consumer discretionary, technology, and energy outperformed while health care and utilities lagged. Big tech stocks firmed, with Apple up 0.5 percent and Microsoft up 0.6 percent. Tesla, the momentum champion, rose 2.6 percent to continue its recent run.

Among companies in focus, Sonos soared 30 percent as the sound technology company reported better than expected quarterly results and raised its guidance. LB Brands, the retailer, jumped 17 percent on big earnings and revenues beats with the stay-at-home trade favoring sales at its Bath and Body Works unit.

In US economic data, existing home sales soared 4.3 percent in October to a 6.850 million annual rate that topped Econoday's consensus range and lifted year-over-year growth to 26.6 percent. Meanwhile, initial jobless claims jumped an unexpected 31,000 to 742,000 in the November 14 week, yet the level nevertheless was the second lowest of the pandemic and comparatively favorable.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 6 cents to US$44.35 while spot gold fell US$3.15 to US$1,866.85. The US dollar was little changed against major currencies. The US Treasury 30-year bond yield fell 3 basis points to 1.57 percent while the 10-year note declined 3 basis points to 0.85 percent.


Virus and shutdown worries undercut equities again Thursday with cyclical stocks leading the declines. The Europe-wide STOXX 600 fell 0.8 percent, the German DAX declined 0.9 percent, the French CAC fell 0.7 percent, and the UK FTSE-100 was off 0.8 percent.

Markets focused on prospects for extended, more restrictive lockdowns across Europe as virus cases continue to rise. Also in focus were stalled European efforts to approve a big recovery package as European Central Bank President Christine Lagarde warned leaders not to delay. On the positive side, AstraZeneca said the elderly are developing strong Covid-19 immunity from its vaccine, and more efficacy data would be coming soon.

Among sectors, miners, travel & leisure, and real estate lagged the most while holding up best were utilities, technology, and media. Among companies in the news, Cineworld, the movie chain, dropped 8.7 percent on reports it is considering shutting its UK cinemas permanently. Investec, the UK investment advisor, fell 7.5 percent after a big revenues miss. Thyssenkrupp, the German industrial conglomerate, lost 3.4 percent after announcing more layoffs and restructuring plans. Norwegian Air dropped 16 percent after filing for bankruptcy protection. On the positive side, HelloFresh, the German meal delivery service, rose 6.1 percent after saying it will expand its US business.

Asia Pacific

Major Asian markets posted mixed results Thursday, with incoming Covid-19 news appearing to provide no clear direction to investor sentiment as cases continue to rise but hopes build that vaccines will prove effective. Japan's Nikkei and Topix indices closed down 0.4 percent and up 0.3 percent respectively, while the Shanghai Composite index and Hong Kong's Hang Seng index also diverged, the former advancing 0.5 percent and the latter dropping 0.7 percent. Australia's All Ordinaries index closed up 0.2 percent following the release of strong employment data.

Conditions in Australia's labour market improved markedly in October, with the unemployment rate picking up slightly but employment, hours worked, and participation surging. This improvement largely reflects the impact of an easing of tight public health restrictions in Victoria, which is Australia's second most populous state and location of almost 25 percent of national economic activity. Employment rose by 178,800 after falling by 29,500 previously, while hours worked rose 1.2 percent on the month. The unemployment rate up picked up from 6.9 percent to 7.0 percent, but this was just below the consensus and largely driven by a significant increase in the participation rate.

Looking ahead*

On Friday in Asia/Pacific, Japanese CPI, Japanese PMI composite flash, and Hong Kong CPI reports are scheduled. In Europe, UK public sector finance, UK retail sales, Eurozone EC consumer confidence, and German PPI reports are due. In North America, Canadian retail sales figures are due.

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