Daily market review

United States

Renewed hopes for a US fiscal stimulus deal gave equities a lift Tuesday, along with positive vaccine news. The Dow Jones industrial index rose 0.6 percent, the S&P 500 gained 1.1 percent, and the NASDAQ 100 gained 1.3 percent.

Negotiations over a US fiscal relief package showed signs of resuming Tuesday. A bipartisan group was reportedly set to unveil a new spending package, and Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi were talking as well Tuesday. The fiscal hopes added to ongoing optimism over rollout of vaccines starting by year-end, which has fueled expectations for a wider recovery by the second half of 2021.

Gains were across the board. Momentum stocks were among the day's best performers, with communications services leading. Other outperformers included energy and banks, which perked up with rising long-term US Treasury yields. Health care outperformed on strength in hospitals and managed care, with United Health up 1.4 percent after reassuring the market on its guidance.

Among companies in focus, chipmaker Micron rose 4.7 percent after raising its guidance. Kohl's, the department store, rose 13 percent after announcing a joint venture with Sephora, the cosmetics maker. Tesla rose 3 percent after news it will be added to the S&P 500 in one shot, rather than in two.

On the downside, Zoom Video, the online meetings leader, fell 15 percent as the company has seen such a huge rally that its latest blowout results evidently were not enough to keep the up-move going.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 21 cents to US$47.38 while spot gold rose US$38.52 to US$1,814.34. The US dollar dropped sharply against most major currencies. The US Treasury 30-year bond yield jumped 10 basis points to 1.67 percent while the 10-year note rose 8 basis points to 0.92 percent.


Positive vaccine news and hopes for global recovery gave equities a boost Tuesday. The Europe-wide STOXX 600 rose 0.7 percent, the German DAX also rose 0.7 percent, the French CAC gained 1.1 percent, and the UK FTSE-100 advanced 1.9 percent.

Markets reacted favorably to news that BioNtech and Pfizer had asked European authorities to approve use of their Covid-19 vaccine after a similar request to US authorities. A strong reading in Chinese PMI manufacturing data added to recovery hopes, and gave trade-sensitive sectors a lift, including basic materials, energy, and banking, and helped UK markets outperform. Ongoing uncertainty about the outcome of EU-UK Brexit talks gave sterling a lift, which also bolstered the export-oriented FTSE-100.

Among companies in focus, Boozt Fashion, the Swedish retailer, rose 6.7 percent after boosting its sales guidance. Aryzta, the Swiss food company, rose 2.1 percent on a revenues beat. Credit Suisse rose 1.3 percent after providing an update on its potential liability in connection with its legacy mortgage-backed securities business.

Asia Pacific

Major Asian markets posted strong gains Tuesday after Australian officials left policy rates on hold and PMI data indicated that major economies in the region are continuing to recover from the economic impact of the Covid-19 pandemic. The Shanghai Composite index outperformed with an increase of 1.8 percent, while Japan's Nikkei and Topix indices advanced 1.3 percent and 0.8 percent respectively. Hong Kong's Hang Seng index and Australia's All Ordinaries index also closed higher, up 0.9 percent and 1.0 percent respectively.

The Reserve Bank of Australia left its main policy rate unchanged at a record low of 0.10 percent at tis policy meeting Tuesday, in line with the consensus forecast, with other policy settings also left on hold. Officials again advised that they currently do not expect to increase the main policy rate for at least three years and again promised to take further policy measures if necessary.

The Markit Manufacturing PMI for China increased from 53.6 in October to 54.6 in November, broadly in line with the official CFLP survey published earlier in the week. This is the index's highest level since November 2010 and indicates that the sector's recovery from the initial impact of the pandemic has established significant momentum. The equivalent surveys for the Indian and Japanese manufacturing sectors showed a drop for India from 58.9 to 56.3 to indicate that the recovery remains strong but is moderating and for Japan a small rise to 49.0, indicating that conditions have almost stabilised.

Japanese labor market data for October, in contrast, showed greater weakness, with the unemployment rate rising from 3.0 percent in September to 3.1 percent, its highest level since April 2016 and well above pre-pandemic levels of below 2.5 percent.

Looking ahead*

On Wednesday in Asia/Pacific, the Australia GDP report is due. In Europe, German retail sales, Swiss CPI, Eurozone PPI and Eurozone unemployment reports are scheduled. In North America, US ADP employment and Fed beige book releases are on tap. In addition, Fed Chair Jerome Powell is scheduled to speak.

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