Daily market review

United States

Value/cyclicals rose Monday on recovery hopes spurred by the weekend news that President Trump would sign the US fiscal stimulus package after all, while mega-cap growth stocks got a lift on year-end flows. The Dow Jones industrial index rose 0.7 percent, the S&P 500 gained 0.9 percent, and the NASDAQ 100 was up 0.7 percent.

Among sectors, leading were information technology, consumer discretionary, and communications services, led by gains in Apple, up 3.6 percent, Facebook, up 3.6 percent, Alphabet, up 2.1 percent, and Amazon, up 3.5 percent. Other winners included Disney, up 3.0 percent, and Visa, up 1.9 percent. Lagging were energy and materials.

Among decliners was Salesforce, the software company, down 0.5 percent. Weibo, the social media giant, fell 13.5 percent despite earnings and revenues beats as markets disliked its slowing user growth and weaker guidance.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 37 cents to US$50.94 while spot gold fell US$6.48 to US$1,872.97. The US dollar was mostly higher against most major currencies. The US Treasury 30-year bond yield was unchanged at 1.66 percent while the 10-year note fell 1 basis point to 0.92 percent.


Equities rose Monday after President Trump approved a US fiscal stimulus package and progress on rolling out vaccines in Europe. The Europe-wide STOXX 600 rose 0.7 percent, the German DAX rose 1.5 percent and the French CAC gained 1.2 percent. UK markets were closed for a public holiday.

Markets reacted favorably to the start of a Europe-wide vaccination program over the weekend in addition to news that Trump would go along with US relief package. Both bolstered expectations for a recovery in 2021.

Among sectors, best were utilities, construction, chemicals, oil & gas, health care. Underperforming were banks, basic resources, media, real estate, telecom, and autos.

Among companies in focus, Delivery Hero, the German food delivery company, jumped 9.3 percent after news it will acquire another delivery service. Lufthansa rose 6 percent after news it will not sell Austrian Airlines. Unicaja Banco, the Spanish insurer, rose 2.6 percent on word it will complete a merger with Liberbank, a Spanish financial services firm.

Asia Pacific

Major Asian markets closed higher Monday, with regional sentiment supported by President Trump's decision to approve fiscal stimulus and the Brexit agreement. Japan's Nikkei and Topix indices closed up 0.7 percent and 0.5 percent, while the Shanghai Composite index was flat on the day. Hong Kong's Hang Seng index underperformed, dropping 0.3 percent, with shares of major online retailer Alibaba dropping sharply after Chinese authorities imposed compliance measures on its affiliate, finance technology firm Ant Group. Markets in Australia were closed for a public holiday.

Japan's industrial production index was flat on the month in November, slowing from growth of 4.0 percent in October and well below expectations for an increase of 2.1 percent. Output of production machinery and devices as well as general-purpose and business oriented machinery declined, offset only in part by increases for vehicles, electrical machinery, and information and communication electronics equipment. Officials expect industrial output to fall 1.1 percent in December and then rebound with strong growth of 7.1 percent in January.

Chinese industrial profits rose 15.5 percent in year-on-year terms in November, slowing from an increase of 28.2 percent in October, with year-to-date growth improving from 0.7 percent to 2.4 percent. This is broadly in line with other data suggesting that the Chinese manufacturing sector is continuing to recover, with both the PMI manufacturing survey and official industrial production data showing the sector expanded in November.

Hong Kong's merchandise trade deficit narrowed from HK$36.8 billion in October to HK$25.6 billion in November. Exports rose 5.6 percent on the year after falling 1.1 percent previously, while imports rose 5.1 percent after increasing 0.6 percent previously. Exports to both mainland China and the US rose on the year after declines in October, with exports to Japan and German also up on the year. Officials continue to expect the recovery of the Chinese economy to support Hong Kong's exports in the near term, but cite Covid-19 developments, Brexit uncertainty, and US-China tensions as potential risks.

Looking ahead*

On Tuesday in North America, the US Case-Shiller house price index report is due.

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