Daily market review

United States

As Trump supporters rushed the US Capitol, equities retreated from their best levels but held onto most of their earlier gains. The Dow Jones industrial index gained 1.4 percent to end at a record high at 30,829, the S&P 500 rose 0.6 percent, but the NASDAQ 100 slipped 0.6 percent.

Markets rallied in the US morning as an apparent Democratic sweep and likely control of the Senate suggested that more US fiscal stimulus is likely. Mega-caps in information technology and communications services were notable laggards on concerns that Democrats would step up regulations on Facebook (down 2.8 percent), Google (down 1 percent), and other new economy leaders.

By midafternoon, however, options volatility rose and equity indexes retreated from their highs as investors watched live images of pro-Trump rioters storming the US Capitol. The rioters succeeded in disrupting Congress's formal declaration of Joe Biden's presidential victory; congressional leaders were removed to safe locations.

Among sectors, leading were energy, materials, financials, and utilities. Lagging were information technology, communications services, and real estate. Apple, down 3.3 percent, led tech stocks lower.

Among Dow stocks, Caterpillar, up 5.6 percent, Goldman Sachs, up 5.4 percent, and American Express, up 3.7 percent, were among the best performers. On the downside, Coca-Cola fell 3.2 percent to extend recent losses on another analyst downgrade.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 38 cents to US$54.01 while spot gold fell US$30.20 to US$1,918.50. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield jumped 10 basis points to 1.80 percent while the 10-year note rose 7 basis points to 1.03 percent.


Equities surged Wednesday on US election results and rising oil prices. The Europe-wide STOXX 600 rose 1.4 percent, the German DAX rose 1.8 percent, the French CAC rose 1.2 percent, while the UK FTSE-100 soared 3.5 percent.

UK markets outperformed for a second day on strength in energy stocks as oil prices rallied and as banking stocks led cyclicals higher on news of a possible Democratic sweep in Georgia's two US Senate runoffs, which spurred expectations for more US fiscal stimulus.

Among the day's best performers were HSBC, up 9.9 percent, and Barclays, up 8.3 percent. Oil stocks BP, up 6.4 percent, and Royal Dutch Shell, up 7 percent, led energy stocks higher. Among other sectors, winners included travel & leisure and real estate. Lagging were utilities, media, chemicals, personal & household goods, autos, construction, food & beverage, and health care.

Among companies in the news, Italian bank UniCredit rose 6.2 percent on news the Italian Treasury would assume E14 billion in nonperforming loans. Vodaphone Group rose 4.4 percent on an analyst upgrade. Informa, the publisher, rose 6.8 percent on positive guidance and announcement of new management. Aviva, the insurer, rose 6.3 percent on an analyst upgrade.

Asia Pacific

Major Asian markets posted mixed results Wednesday with regional investors focused on a range of factors: mixed PMI survey data, the arrest of opposition leaders in Hong Kong, the US Senate runoff elections, and a spike in oil prices after Saudi Arabia announced production cuts.

The Shanghai Composite index and Hong Kong's Hang Seng index closed up 0.6 percent and 0.2 percent respectively, with shares of major Chinese tech companies recording strong advances. Japan's Nikkei and Topix indices closed down 0.4 percent and up 0.3 percent respectively.

Hong Kong police arrested more than 50 opposition and pro-democracy politicians and activists and raided media outlets and law firms early Wednesday. These actions represent the most high-profile steps taken by authorities since Beijing introduced tight security laws in Hong Kong last June and are reported to be related to unofficial primary elections held by opposition parties in July last year. US President-elect Biden's nominee for Secretary of State, Anthony Blinken, has condemned China's measures.

Caixan's PMI of China's services sector fell from 57.8 in November to 56.3 in December, indicating that activity in the sector expanded for the eighth consecutive month but at a more moderate pace. Other PMI surveys published Wednesday showed mixed conditions elsewhere in the region with Japan's services sector down slightly from 47.8 in November to 47.7 in December, while the equivalent index for India fell from 53.7 to 52.3, still indicating a strong expansion. PMIs for Hong Kong and Singapore showed markedly divergent outcomes with Hong Kong down from 50.1 in November to 43.5 in December after a surge in Covid cases prompted a re-tightening of public health restrictions; however, the equivalent index for Singapore rose sharply from 46.7 to 50.5, its highest level since January 2020.

Looking ahead*

On Thursday in Asia/Pacific, the Australian goods and services trade report is due. In Europe, German manufacturers' orders, Swiss retail sales, UK PMI construction, Eurozone EC economic sentiment, Eurozone HICP flash, Eurozone retail sales, and Italian CPI reports are scheduled. In North America, US international trade in goods and services, US jobless claims, US ISM services, Canadian merchandise trade, and Canadian Ivey PMI reports are due.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies