Daily market review

United States

The 2021 rally resumed Thursday as markets expect US fiscal stimulus and vaccines to power recovery in the second half. The Dow Jones industrial index rose 0.7 percent, the S&P 500 gained 1.5 percent, and the NASDAQ 100 rallied 2.6 percent to a new record high.

Relief that Congress approved incoming President-elect Biden's election win after Wednesday's harrowing scenes at the US Capitol gave buyers permission to return. Unexpectedly strong US services purchasing managers data added to positive sentiment. Markets see Biden and the Democratic-controlled Congress spending heavily to boost the US economy.

Growth stocks outperformed after relative weakness on Wednesday. Technology shares led winners, with Apple up 3.4 percent, Microsoft up 2.9 percent and printer maker 3D Systems soaring 104 percent after raising its guidance and selling non-core business. Megacap internet stocks helped communications services rebound, with Facebook up 2.1 percent and Google up 3 percent.

Among other winners were auto suppliers, homebuilders, and department stores. Banks tacked on more gains after Wednesday's advance. Ongoing strength in oil prices boosted energy stocks. A good day for Amazon, up 0.8 percent, lifted consumer discretionary. Lagging were consumer staples and utilities.

Among Dow stocks, Walgreens rose 5.2 percent on an earnings beat. JP Morgan gained 3.2 percent after an analyst upgrade.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 50 cents to US$54.51 while spot gold fell US$4.22 to US$1,914.28. The US dollar rose sharply against major currencies. The US Treasury 30-year bond yield gained 4 basis points to 1.86 percent while the 10-year note rose 4 basis points to 1.08 percent.


Equities edged up Thursday with support from rising oil prices and relief that Joe Biden's election as US president was confirmed by Congress. The Europe-wide STOXX 600 rose 0.5 percent, the German DAX gained 0.6 percent, the French CAC rose 0.7 percent, and the UK FTSE-100 edged up 0.2 percent.

Biden's ascendancy and Democratic control of the Senate fed expectations for recovery in the second half of 2021. But immediate pandemic concerns limited gains as new numbers for Covid cases and deaths continued their sharp rise, and European lockdowns and restrictions continue.

Outperforming were basic resources, construction, oil & gas, banks, autos, industrials, and telecom. Lagging were travel & leisure, real estate, media, technology, health care, and food & beverages.

Among companies in the news, UK supermarket Sainsbury's rose 6.9 percent as it raised its guidance as people stay home and spend money on staples. On the downside, RyanAir fell 1.7 percent in light of lockdowns in the UK and Ireland.

European economic news was mixed. German manufacturers' orders showed an unexpected solid 2.3 percent monthly increase in November. Eurozone retail sales, on the other hand, missed expectations with a decline of 6.1 percent on the month, their worst performance since the first wave of the coronavirus.

Asia Pacific

Most major Asian markets closed higher Thursday after the Dow Jones industrial index advanced to a record high on Wednesday. The results of the US Senate runoff elections and the prospects of additional fiscal stimulus also provided some support to regional investor sentiment despite the serious civil unrest in Washington D.C.

Japan's Nikkei and Topix indices outperformed with increases of 1.6 percent and 1.7 percent respectively, Australia's All Ordinaries index advanced 1.4 percent, and the Shanghai Composite index closed up 0.7 percent.

Hong Kong's Hang Seng index was the main outlier, closing down 0.5 percent, with shares of China Telecom, China Unicom, and China Mobile all falling sharply after the New York Stock Exchange again announced that they would delist these firms. The NYSE initially announced it would delist these companies last week in order to comply with US sanctions against firms deemed to have links with the Chinese military. That decision was then reversed earlier in the week, but reinstated after guidance from the US Treasury.

Australia's trade surplus narrowed from A$6.583 billion in October to A$5.022 billion in November. Exports rose 3.5 percent on the month in November after a revised gain of 4.4 percent in October, with stronger growth in services exports offset by weaker increases in exports of rural and non-rural goods. Imports rose 9.7 percent on the month in November, accelerating from an increase of 2.0 percent in October, with the headline improvement broad-based across categories but particularly pronounced for capital goods.

Looking ahead*

On Friday in Asia/Pacific, the Japanese household spending report is due. In Europe, Swiss unemployment, German industrial production, German merchandise trade, French consumer manufactured goods consumption, French industrial production, French merchandise trade, UK Halifax house price index, and Eurozone unemployment reports are scheduled. In North America, US employment, US wholesale inventories, US consumer credit, and Canadian labour force figures are due.

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