Daily market review

United States

Major equities indexes ended flat to weaker Friday in mixed trading linked to portfolio rebalancing and options expiry, along with uncertainty over an expected US fiscal stimulus package. The Dow Jones industrial index and the S&P 500 both eased 0.4 percent, and the NASDAQ 100 declined 0.1 percent.

Lack of a conclusion in US fiscal talks and the prospect of a US government shutdown, plus apparent stalemate in Brexit talks added to market concerns. On the virus front, investors remain focused on the rollout of the vaccines but they also faced frightening pandemic numbers and wider lockdowns.

The scheduled addition of Tesla to the S&P 500 after Friday's close hurt S&P stocks, along with Friday's quadruple witching options expiration. Sectors were mixed, with energy the weakest group despite an uptick in oil prices.

Among other sectors, REITs were hit by losses in retail properties. Banks lagged, along with consumer discretionary, and health care. On the positive side, communications services beat the market, along with industrials, technology, and consumer staples. Materials fared best, paced by Dupont, up 2.7 percent, after it spun off its nutrition business.

Among S&P losers, Vornado Realty was off 4.4 percent and Cigna, the insurer, declined 2.7 percent after an analyst downgrade. Weakness in Apple, down 1.6 percent, weighed, along with Intel, down 6.3 percent, and Nike, down 2.3 percent ahead of its earnings report due after the close.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 59 cents to US$52.12 while spot gold declined US$2.78 to US$1880.86. The US dollar rose against most major currencies but declined vs. the Swiss franc. The US Treasury 30-year bond yield rose 1 basis point to 1.69 percent while the 10-year note rose 1 basis points to 0.95 percent.


Equities ended flat to lower Friday as Brexit talks and US fiscal stimulus remained in doubt while Europe faced tightening anti-Covid restrictions headed into year end. The Europe-wide STOXX 600 eased 0.4 percent, the German DAX was off 0.3 percent, the French CAC slipped 0.4 percent, and the UK FTSE-100 was also off 0.3 percent.

Brexit talks dragged on with UK and EU officials warning the two sides remain deadlocked, largely over the fisheries issue. In Washington, D.C., talks on Covid-19 relief package headed into the weekend with no certainty on the outcome.

Among sectors, weakest performers were real estate, retail, travel & leisure, banks, financial services, insurance, and basic resources. Holding up best were industrials, telecom, health care, autos, and chemicals.

Travel & leisure shares were depressed by a decline in IAG, owner of British Airways, down 2.1 percent after a report that it will buy Air Europa, the Spanish carrier. Norwegian Air dropped 23 percent after news it will issue more shares as its restructuring continues.

On the positive side, Zehnder, the Swiss heating and ventilation manufacturer, rose 6 percent on improved guidance. Photocure, the Norwegian pharma, rose 10 percent after an analyst upgrade.

In economic data, German Ifo climate indicator was 92.1 in December, up from 90.9 in November and above the market consensus but still short of October's 92.5, and 3.6 points below February's pre-pandemic level.

Asia Pacific

Most major Asian markets closed lower on the day Friday but finished the week higher, with global Covid-19 developments still the main focus for regional investors. Japan's Nikkei and Topix indices closed down 0.2 percent and flat on the day respectively and advanced 0.4 percent and 0.6 percent on the week respectively. The Shanghai Composite index closed down 0.3 percent on the day and outperformed on the week with an increase of 1.4 percent, while Hong Kong's Hang Seng index fell 0.7 percent on the day and was flat on the week. Australia's All Ordinaries index fell 1.1 percent on the day, eroding its gain on the week to 0.5 percent.

The Bank of Japan left policy settings on hold at the conclusion of its December meeting, keeping its main policy rate at minus 0.1 percent. Officials have also extended the operation of a special lending facility established as part of its response to the Covid-19 pandemic and authorization for purchases of a broader range of assets as part of their asset purchase program. Officials continue to expect policy rates to stay at or below current levels for the foreseeable future but have reiterated that they will not hesitate to lower them further if considered necessary.

Japanese inflation data released Friday showed price pressures continued to weaken in November, with both headline and underlying measures of inflation moving further into negative territory. The headline consumer price index fell 0.9 percent on the year in November after dropping 0.4 percent in October, while core CPI, which excludes fresh food prices, fell 0.9 percent in after dropping 0.7 percent previously.

New Zealand's merchandise trade balance shifted from a revised deficit of NZ$472 million in October to a surplus of NZ$252 million in November. Exports rose 4.3 percent on the month in November while imports fell 2.9 percent.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

Looking forward