Daily market review

United States

Equities were narrowly mixed Thursday with cyclicals better on hopes for US fiscal relief and expectations for an array of Covid-19 vaccines. The Dow Jones industrial index rose 0.3 percent, the S&P 500 declined 0.1 percent, and the NASDAQ 100 firmed 0.2 percent.

Positive statements from congressional leaders on fiscal talks and news that Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi were meeting bolstered expectations for progress on a deal. On the vaccine front, investors see multiple vaccines likely to become available over the next six months. Still, concerns about exponential growth in US Covid-19 cases limited the gains, and the major indexes faded into the close. Investors also focused on reports pointing to supply chain issues that may limit vaccine distribution.

Among sectors, stocks tied to reopening led the winners. Energy was the best performer, with oil prices up after the latest OPEC+ output pact. Industrials were powered by gains in airlines and aerospace. Cruise lines, casinos, and department stores led consumer discretionary stocks higher. Lagging were the stay-at-home stocks including communications services and consumer staples, while utilities, the defensive play, lagged the most.

Among companies in focus, cybersecurity company Crowdstrike rallied 14 percent on a big earnings beat and fast subscription revenue growth. On the downside, Costco fell 2.5 percent on disappointment over the pace of its sales growth. Splunk, the software company, dropped 23 percent after missing on its results and guidance. Facebook declined 2 percent on expectations the social network faces federal and state lawsuits.

In US economic news, initial jobless claims fell 75,000 to 712,000 in the week ended November 28, a better outcome than the 780,000 expected by the consensus, and recovering the increases recorded over the past two weeks. Separately, ISM's services index fell 7 tenths to 55.9 in November though very near Econoday's consensus for 56.0.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 40 cents to US$48.59 while spot gold rose US$13.57 to US$1,841.95. The US dollar was weaker against major currencies. The US Treasury 30-year bond yield declined 3 basis points to 1.66 percent while the 10-year note fell 2 basis points to 0.92 percent.


Equities were narrowly mixed Thursday with UK stocks outperforming on speculation there may be a last-minute EU-UK Brexit deal while German stocks lagged after Germany extended anti-Covid restrictions into January. The Europe-wide STOXX 600 was unchanged, the German DAX declined 0.5 percent, the French CAC was off 0.2 percent, and the UK FTSE-100 was up 0.4 percent.

Outperforming sectors included travel & leisure, basic resources, banks, media, and industrials. Lagging were chemicals, health care, insurance, utilities, and oil & gas.

Mining stocks gave the FTSE 100 a lift, with BHP up 2.2 percent and Rio Tinto up 2.7 percent in response to rising commodities prices. Rolls Royce gained 5.7 percent on news it may reenter the market for narrow-body jet engines. Meanwhile, Sainsburys, the grocery chain, rose 4.1 percent after saying it will return tax relief money to the government.

On the downside, Pharma Mar, the Spanish pharma, declined 14 percent on disappointing clinical trial news. Hochschild Mining fell 13 percent on news its founder had sold a chunk of shares. Pandox, the Swedish hotel chain, fell 7 percent after an analyst downgrade.

Asia Pacific

Most major Asian markets closed higher Thursday after the release of mixed PMI survey data and solid Australian trade data, with investor sentiment also supported by hopes that a US fiscal package will soon be reached. Hong Kong's Hang Seng index and Australia's All Ordinaries index rose 0.7 percent and 0.5 percent respectively, while Japan's Nikkei and Topix indices were little changed on the day, closing flat and up 0.1 percent respectively. The Shanghai Composite index underperformed with a 0.2 percent decline.

The Markit PMI survey's business activity index for the Chinese services sector increased from 56.8 in October to 57.8 in November, indicating that activity in the sector expanded for the seventh consecutive month and at the fastest pace since June. Other Markit PMI surveys published Thursday showed mixed conditions elsewhere in the region in November. The business activity index for Japan's services sector rose slightly from 48.0 in October to 48.1 in November, above the flash estimate of 47.0, while the equivalent index for India fell from 54.1 to 53.7, still indicating a strong expansion. Meanwhile, the economy-wide PMI survey for Hong Kong showed a stabilization in economic conditions, with the headline index picking up from 49.8 to 50.1, but the equivalent index for Singapore fell from 48.6 to 46.7, indicating a sharper contraction in activity.

Looking ahead*

On Friday in Asia/Pacific, the Australian retail sales report and the Reserve Bank of India policy announcement are due. In Europe, German manufacturers' orders, Italian retail sales, and UK PMI construction reports are scheduled. In North America, Canadian merchandise trade, Canadian labour force survey, US employment, US international trade in goods and services, and US factory orders reports are on tap.

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