Daily market review

United States

Expectations for Covid-19 vaccines and US fiscal stimulus kept equities firm Friday, with energy stocks leading value stocks higher, and weakness in mega-caps restraining the gains. The Dow Jones industrial index rose 0.8 percent, the S&P 500 gained 0.9 percent, and the NASDAQ 100 rose 0.7 percent.

Investor sentiment remained underpinned by expectations for multiple vaccines to start rolling out this month. Markets anticipate a fiscal package to bolster the flagging recovery, and saw the weak US jobs report as likely to spur Republicans and Democrats to reach a long-delayed compromise agreement.

Among sectors, energy stocks outperformed the most as oil prices remained buoyant in the wake of the OPEC+ output pact, and on hopes for an end to the pandemic and wider economic recovery. Exploration and production stocks led the winners, with Halliburton up xxxx percent.

Other winners included financials, industrials, and real estate. Communication services and consumer discretionary lagged, and mega-caps were distinctly weaker, with Apple down 0.6 percent, Facebook down 0.8 percent, and Amazon down 0.8 percent. Among Dow stocks, Intel gained 2.0 percent while Caterpillar was up 4.3 percent. Boeing fell 1.9 percent as it gave up some recent gains.

Among companies in focus, Genesco, the footwear retailer, rose 4.4 percent, and Docusign, the electronic agreements company, gained 5.3 on big earnings beats.


In US economic news, nonfarm payrolls rose 245,000 in November which is less than half of Econoday's consensus for 500,000 though better, but not by much, than the low estimate of 200,000. Weakness is broad with government showing the most, falling 99,000 as federal payrolls fell 86,000 mostly due to the loss of temporary Census workers.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 42 cents to US$49.01 while spot gold fell US$5.75 to US$1836.20. The US dollar was mostly better against major currencies, though weaker vs. Canadian dollar and Swiss franc. The US Treasury 30-year bond yield rose 8 basis points to 1.74 percent while the 10-year note rose 6 basis points to 0.97 percent.

Asia Pacific

Major Asian markets were little changed on the day Friday, with moves on the week mixed but generally moderate. Japan's Nikkei and Topix indices fell 0.2 percent and was flat on the day respectively, and advanced 0.4 percent and fell 0.6 percent respectively on the week. Australia's All Ordinaries index rose 0.3 percent on the day and 0.7 percent on the week. The Shanghai Composite index rose 0.1 percent on the day and outperformed on the week with an increase of 1.1 percent, while Hong Kong's Hang Seng index rose 0.4 percent on the day and fell 0.3 percent on the week. Shares of major Chinese firms, including the chipmaker SMIC and the energy producer CNOOC, fell sharply Friday after the US Department of Defense designated them as controlled by the Chinese military, subjecting them to various export restrictions.

The Reserve Bank of India's Monetary Policy Committee has left the benchmark repurchase rate unchanged at 4.00 percent at its policy review held Friday. Officials noted that the Indian economy's recovery from the initial impact of the Covid-19 pandemic is "gaining traction" but also expressed concerns that headline inflation has moved further above RBI's target range of 2.0 percent to 6.0 percent since their last policy meeting. Officials attribute this recent strength in inflation to a range of factors, including supply chain disruptions, excessive margins, and indirect taxes and argue that further efforts are required to mitigate these factors. In the meantime, however, officials concluded that high inflation constrains their ability to cut policy rates further, but also affirmed that policy will be kept accommodative in coming months.

Retail sales in Australia rose 1.4 percent on the month in October after falling 1.1 percent in September, with year-on-year growth also picking up from 5.6 percent to 7.1 percent, broadly in line with preliminary estimates. Public health restrictions and border closures have continued to weigh on consumer spending but have eased in recent weeks and are set to be eased further. The rebound in retail sales in October was largely driven by strong growth in Victoria, with spending there up 5.1 percent after authorities lifted a tight lockdown late September. Sales growth was mixed in other states and territories.

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