Daily market review

United States

Growth stocks powered US equities Wednesday with the FAANGs leading and cyclicals lagging for a second day. The Dow Jones industrial gained 0.8 percent, the S&P 500 rose 1.4 percent, and the NASDAQ 100 rallied 2.0 percent.

Markets extended recent gains on the day of President Biden's inauguration as investors see more stimulus and recovery ahead.

Communications services were the day's featured winner, paced by Netflix, up 17 percent on strong fourth-quarter revenues and new subscriptions. Google gained 5.4 percent and Facebook was up 2.4 percent. Tech stocks gave the market a lift with Apple up 3.3 percent and Microsoft up 3.7 percent.

Amazon rose 4.6 percent to power consumer discretionary. Industrials lagged, along with materials. Consumer staples suffered from a selloff in Procter & Gamble, a pandemic favorite, down 1.3 percent despite beating earnings expectations. Energy lagged, and financials were off the most, with banks down on disappointing results from US Bancorp, down 5 percent, and BNY Mellon, down 7.3 percent.

Ford was also in focus, up 8.4 percent after an upgrade at Deutsche Bank.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 3 cents to US$55.88 while spot gold rose US$30.07 to US$1869.75. The US dollar fell against most major currencies. The US Treasury 30-year bond yield was down 1 basis point to 1.83 percent while the 10-year note also fell 1 basis point to 1.08 percent.


Positive company results and US stimulus hopes boosted equities Wednesday. The Europe-wide STOXX 600 rose 0.7 percent, the German DAX was up 0.8 percent, the French CAC gained 0.5 percent, and the UK FTSE-100 rose 0.4 percent.

Markets have focused on the prospect of aggressive stimulus from the Biden administration plus more concerted anti-Covid efforts as likely to spur the global economy in the second half. Earnings beats Wednesday cane from Richemont, up 4.9 percent, BASF, up 1.3 percent, and ASML, up 3 percent, added to the bullish narrative.

Among sectors in the STOXX 600, biggest winners were autos & parts, basic resources, technology, media, retail, travel & leisure, industrials, telecom, and personal & household goods. Lagging were food & beverage, health care, utilities, insurance, construction, and banks.

In economic news, Eurozone consumer prices were unrevised in the final report for December. At minus 0.3 percent, annual inflation was in line with its flash estimate and the rate seen every month since September. Accordingly, the December outturn means that inflation has now been below zero for five months in a row.

Asia Pacific

Most major Asian markets rose Wednesday on US Treasury Secretary-nominee Janet Yellen's call for aggressive fiscal stimulus. China's Shanghai composite firmed 0.5 percent on the Yellen comments and on aggressive PBOC provision of liquidity after Chinese markets slipped Tuesday in the face of resurgent Covid-19.

Hong Kong shares outperformed for a second consecutive day, with the Hang Seng index up 1.1 percent to a record high, led by strength in technology stocks. Alibaba, the internet commerce leader, was up 8.5 percent after its founder, Jack Ma, turned up after being absent since October.

Australian shares advanced as rising commodities prices gave mining and energy shares a boost; the All-Ordinaries index rose 0.5 percent.

Japanese shares lagged, with the Nikkei 225 off 0.4 percent as the market appeared over-extended after gains Tuesday and early Wednesday, and some worries ahead of the Biden inauguration Wednesday. Sentiment has also been undercut by concerns over rising Covid cases, with stock market weakness centering in retailers and hospitality service providers.

In economic news, the People's Bank of China left the one-year loan prime rate unchanged at 3.85 percent at its monthly review, with the equivalent five-year rate also unchanged at 4.65 percent. These rates have been on hold since they were reduced by 20 basis points and 10 basis points respectively in April.

Among companies in the news, LG Electronics rose 12.8 percent after saying it's considering all options for its mobile phone business. Geely Automobile Holdings rose 5.6 percent on news it will team with Tencent on autonomous vehicles.

Looking ahead*

On Thursday in Asia/Pacific, Japanese merchandise trade, Hong Kong CPI, and Australia labour force survey reports are scheduled. In Europe, reports are due on UK CBI industrial trends and Eurozone EC consumer confidence, plus the ECB policy announcement. In North America, US housing starts and permits, US jobless claims, and Philadelphia Fed manufacturing reports are on tap.

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