Daily market review

United States

A rally in Apple shares and renewed hopes for US fiscal stimulus helped equities rebound Tuesday. The Dow Jones industrial index rose 1.1 percent, the S&P 500 gained 1.3 percent, and the NASDAQ 100 also rose 1.3 percent.

News that negotiators on a US Covid relief package would resume meeting late Tuesday and a report that Apple will boost its iPhone production sharply were the key factors helping risk assets advance. Also of note, Senate Majority Leader and political opponent Mitch McConnell congratulated Joe Biden as "president-elect" after yesterday's Electoral College vote, apparently ending any doubt over the outcome of the election.

Outside of Apple, which jumped 5 percent, and Apple's many suppliers, value/cyclicals led the advancers, and an uptick in oil prices gave energy stocks a lift.

Among sectors, outperformers also included financials, industrials, materials, and utilities. Lagging were real estate and communications services.

Among companies in focus, Eli Lilly popped up 6 percent after raising its guidance and its dividend. Exxon Mobil rose 1.9 percent on higher oil prices and an analyst upgrade.

In US economic data, big gains for vehicle output and aircraft output led a mostly favorable November industrial production report where the 0.4 percent headline gain beat out Econoday's consensus but by only 1 tenth. Manufacturing output, at plus 0.8 percent, just exceeded Econoday's top estimate.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 46 cents to US$50.72 while spot gold rose US$26.63 to US$1,854.18. The US dollar was weaker against major currencies. The US Treasury 30-year bond yield rose 3 basis points to 1.66 percent while the 10-year note rose 1 basis points to 0.91 percent.


Equities were widely mixed Tuesday, with vaccine optimism offsetting near-term Covid worries. The Europe-wide STOXX 600 rose 0.3 percent, the German DAX rose 1.1 percent, the French CAC was flat, and the UK FTSE-100 was off 0.3 percent.

Expectations for rollout of more vaccines in Europe and the US underpinned market sentiment. On the negative side, London and Italy were expected to step up restrictions soon as Covid cases reaccelerate. Uncertainty continued over Brexit talks,

Among sectors, the best performers included autos, basic resources and technology. Worst off were health care, retail, and utilities. Among companies in the news, Gulf Keystone Petroleum rose 11.5 percent on its latest output figures and raised guidance. Chemring, the UK defense contractor, rose 12 percent on a big revenues beat. On the downside, H&M, the Swedish retailer, fell 3 percent on disappointing quarterly sales results. Zealand Pharma fell 9 percent on disappointing clinical trial results.

Asia Pacific

Most Asian markets closed lower Tuesday, with regional investors still concerned about the impact of high Covid-19 cases and public health restrictions in major global economies despite the ongoing rollout of vaccines. Chinese data published Tuesday were generally in line with expectations.

Hong Kong's Hang Seng index underperformed with a decline of 0.7 percent, while the Shanghai Composite index closed down 0.1 percent and Japan's Nikkei and Topix indices fell 0.2 percent and 0.5 percent respectively. Australia's All Ordinaries index dropped 0.5 percent, with shares of major miners down sharply after Chinese state media reported that authorities would restrict coal imports from Australia.

Monthly Chinese activity data indicate that the economy is continuing to recover from the impact of the pandemic earlier in the year, broadly in line with recent PMI survey data. Industrial production rose 1.0 percent on the month in November after increasing 0.78 percent in October with year-on-year growth picking up slightly from 6.9 percent to 7.0 percent, matching the consensus forecast. Retail sales rose 1.31 percent on the month after increasing 0.72 percent previously, with year-on-year growth accelerating from 4.3 percent to 5.0 percent, also matching the consensus forecast.

Looking ahead*

On Wednesday in Asia, Japanese merchandise trade and Japanese PMI composite flash reports are scheduled. In Europe, UK CPI, UK PPI, French PMI composite flash, German PMI composite flash, Eurozone PMI composite flash, UK PMI composite flash, and Eurozone merchandise trade reports are due. In North America, the big event will be the FOMC policy announcement and Fed chair press conference, plus the Canadian CPI, US retail sales, US PMI composite flash, US business inventories, US housing market index.

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