Daily market review

United States

Corrective pressures pushed equities lower Monday after major indexes set new highs last week. But stocks did end off their lows as the Dow Jones industrial index eased 0.3 percent, the S&P 500 slipped 0.7 percent, and the NASDAQ 100 fell 1.3 percent.

Communications stocks were hit by a selloff in Twitter, down 6.4 percent, and Facebook, down 4 percent, after Twitter banned President Trump from its platform permanently, and Facebook suspended him. Investors expressed concern that the loss of Trump's followers would hurt the platforms or lead to boycotts or other disruptions.

Concerns over high valuations as fixed-income yields have risen lately added to modest selling pressure. Risk-off pressures were evident as bitcoin and other crypto-currencies plunged. Weakness extended across most stock sectors including tech mega-caps, with Apple down 2.3 percent and Microsoft down 1.0 percent to lead tech stocks lower. A selloff in restaurants hurt consumer discretionary shares after several restaurant chains issued gloomy results. Real estate suffered the most.

Among companies in focus, Denny's, the diner chain, fell 2.1 percent after weaker-than-expected quarterly sales and guidance. Boeing fell 1.5 percent on the crash of a model 737-500, not a 737 Max, near Jakarta. Among winners, NIO, the electric vehicle maker, rose 6.4 percent after unveiling a new model. Pharma Eli Lilly jumped 12 percent on positive news in its Alzheimer's drug trial.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 80 cents to US$55.43 while spot gold was unchanged at US$1,846.50. The US dollar rose sharply against major currencies. The US Treasury 30-year bond yield was unchanged at 1.88 percent while the 10-year note rose 1 basis point to 1.13 percent.


Heightened pandemic worries forced equities to retreat from recent highs Monday. The Europe-wide STOXX 600 declined 0.7 percent, the German DAX fell 0.8 percent, the French CAC fell 0.8 percent, and the UK FTSE-100 fell 1.1 percent.

Only health care stocks managed gains as investors focused on soaring virus cases and tightening lockdowns across Europe. UK markets reacted badly after government warnings that the worst of the pandemic is coming as a more contagious version of the virus circulates. Highly-publicized delays in rolling out vaccines, along with public skepticism over the vaccines, added to pandemic concerns.

Among sectors, worst off were basic resources, travel & leisure, construction, autos, retail, food & beverage, oil & gas, industrials, financials, and real estate amid concerns the resurgent virus will delay recovery. Holding up best, along with health care, were telecom, chemicals, and technology.

Among companies in focus, Swiss pharma Roche rose 3.8 percent after its flu medicine received EU approval. On the downside, Carnival, the cruise line, fell 3 percent after pre-announcing even weaker-than-expected earnings. Miner Rio Tinto fell 1.8 percent and BHP declined 2.6 percent as commodities retreated from last week's highs.

Asia Pacific

Most major Asian markets closed lower Monday, with regional sentiment impacted by reports that institutions will be forced to delist several hundred structured products from the Hong Kong Stock Exchange to comply with restrictions imposed by US authorities on companies deemed to have links to the Chinese military.

The Shanghai Composite index closed down 1.1 percent, Australia's All Ordinaries index also fell 1.1 percent, and the Hong Kong's Hang Seng index rose 0.1 percent. Markets were closed in Japan for a holiday.

Boosted by higher pork prices, China's consumer price index rose 0.2 percent on the year in December, picking up from a decline of 0.5 percent in November. Yet non-food prices were again little changed, suggesting that underlying price pressures remain steady and subdued.

Retail sales in Australia rose 7.1 percent on the month in November after increasing 1.4 percent in October, with year-on-year growth accelerating from 7.1 percent to 13.3 percent. Stronger growth was largely driven by a 22.4 percent month-on-month increase in Victoria, Australia's second most populous state, with spending there continuing to surge after authorities lifted a tight lockdown late September.

Looking ahead*

On Tuesday in Asia/Pacific, Indian CPI and industrial production reports are scheduled. In Europe, the Italian retail sales report is due. In North America, US NFIB small business optimism and US JOLTS job openings reports are on tap.

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