Daily market review

United States

Equities were mixed to lower Tuesday as strength in Apple offset broad weakness elsewhere. The Dow Jones industrial index declined 0.7 percent, the S&P 500 eased 0.2 percent, but the NASDAQ 100 was up 0.5 percent.

Markets lacked energy and liquidity headed into the Christmas holiday weekend but most sectors eroded on coronavirus worries, amid new anti-virus restrictions in Asia and Europe, and concern over the new faster-spreading virus mutation discovered in the UK.

Technology shares gained as Apple rose 2.7 percent on enthusiasm spurred by reports it will move ahead with plans for a self-driving car using new battery technology. Otherwise, defensive sectors outperformed, including real estate and utilities. On the downside, weakness in oil prices hurt energy stocks. Other laggards included consumer discretionary, industrials, and communications services.

In US economic data, consumer confidence dropped in December on virus fears to a lower-than-expected 88.6 from a downward-revised 92.9 in November. Separately, existing home sales eased 2.5 percent to a lower-than-expected 6.690 million annual rate in November after five consecutive monthly gains.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 71 cents to US$49.99 while spot gold declined US$15.17 to US$1,860.93. The US dollar rose against most major currencies. The US Treasury 30-year bond yield fell 2 basis point to 1.65 percent while the 10-year note fell 2 basis points to 0.92 percent.


Oversold conditions and more hopeful Brexit news helped stocks recover Tuesday after Monday's steep selloff even as virus news remained negative. The Europe-wide STOXX 600 gained 1.2 percent, the German DAX rose 1.3 percent, the French CAC rose 1.4 percent, and the UK FTSE-100 was up 0.6 percent.

In Brexit talks, reports said the EU had rejected the latest UK offer on the fisheries issue. Other reports said top EU and UK officials were holding secret talks to make another push to reach a compromise agreement. On the virus front, markets reacted favorably to news that the UK and France were seeking to reopen their border after its closing due to concerns over a new fast-spreading mutation in the coronavirus. Worries about the new virus and the impact of UK lockdowns remained a big weight on sentiment.

Among sectors, best performers included technology, banks, utilities, retail, construction, food & beverage, and personal & household goods. Lagging were basic resources, telecom, travel & leisure, health care, and media.

Among companies in focus, AstraZeneca was a notable decliner, down 1.5 percent, on disappointing news in a drug trial. Glencore, the miner, fell 1.3 percent as commodities prices declined amid concern that the virus will hit demand.

Asia Pacific

Major Asian markets closed lower Tuesday, with a bare regional data calendar keeping the focus on global Covid-19 developments. Adding to concerns about rising Covid-19 cases in parts of the region, investor sentiment was also impacted by the travel bans imposed on the UK in response to the new mutation of Covid-19 identified last week. The Shanghai Composite index closed down 1.9 percent, Hong Kong's Hang Seng index fell 0.8 percent, and Japan's Nikkei and Topix indices closed down 1.1 percent and 1.6 percent respectively. Japan's government published a monthly assessment of economic conditions Tuesday, with officials pointing to some improvement in exports but also some areas of weakness in household consumption. Australia's All Ordinaries index fell 1.1 percent, with preliminary data showing strong retail sales growth in November doing little to support sentiment.

Looking ahead*

On Wednesday in Asia, Bank of Japan policy board minutes and the Singapore CPI report are on tap. In Europe, French PPI, and Italian business and consumer confidence reports are due. In North America, US durable goods, US jobless claims, US personal income and outlays, US new home sales, US consumer sentiment, US FHFA house prices, and Canadian monthly GDP reports are scheduled.

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