Daily market review

United States

Growth stocks continued to outperform Thursday, paced by heavily-weighted technology and communications shares, while cyclicals held back the major equity indexes. The Dow Jones industrial average and the S&P 500 were both flat, while the NASDAQ 100 gained 0.6 percent.

Growth stocks benefited from expectations for stimulus from the incoming Biden administration, and reacted well to a raft of executive orders aimed at taming the pandemic. Markets were also supported by the day's mostly better US economic data.

Consumer discretionary shares fared best, led by Amazon, up 1.3 percent, and by home builders, with the latter getting a boost from another beat in US housing data. Housing starts surged 5.8 percent to 1.669 million and permits rose 4.5 percent to 1.709 million, well above expectations.

Technology shares outperformed, with support from Apple, up 3.7 percent. Communications services advanced, with Facebook up 2 percent.

On the downside, energy stocks suffered as oil prices retreated, with Chevron down 3.5 percent. Industrials suffered from weakness in airlines, with United Airlines off 5.7 percent on dismal earnings. Consumer staples lagged, along with materials and health care.

Among stocks in focus, Ford rose another 6.2 percent on top of strong gains earlier this week as investors eyed Ford's electric vehicle prospects. On the downside, Alcoa dropped 12 percent despite a big earnings beat as markets reacted to its cautious guidance.

In other US economic data, initial jobless claims fell back 26,000 to 900,000 in the January 16 week, a level that is still highly elevated and which hit Econoday's consensus exactly. Meanwhile, the Philadelphia Fed's manufacturing index came in at 26.5, far above market expectations in contrast, however, to last week's Empire State data which were flat.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 14 cents to US$56.02 while spot gold rose 77 cents to US$1,870.52 The US dollar fell against most major currencies. The US Treasury 30-year bond yield was up 3 basis points to 1.86 percent while the 10-year note rose 1 basis point to 1.09 percent.


Equities were flat to lower Thursday with sectors mixed and focus on European lockdowns and the coronavirus. The Europe-wide STOXX 600 edged up 0.1 percent, the German DAX eased 0.1 percent, the French CAC slipped 0.7 percent, and the UK FTSE-100 declined 0.4 percent.

News that the European Central Bank left its policy stance unchanged, as expected, left markets without much guidance, though ECB President Christine Lagarde said the bank was ready to provide more support for the Eurozone economy if the pandemic worsens. That left investors to focus on outgoing German Chancellor Angela Merkel's call for uniform, stepped-up anti-Covid measures across the European Union.

Among sectors, technology, autos, retail, and financial services fared best, offset by laggards – real estate, oil & gas, media, insurance, health care, and construction.

Strength in technology stocks reflected the rally in US tech stocks as growth shares have been in vogue on Wall Street. A late selloff in oil hurt energy shares, with Royal Dutch Shell down 2.7 percent, and BP off 3.1 percent.

Among companies reporting results, Zur Rose, the Swiss pharmacy, rose 8.9 percent on a revenues beat. Bankinter, the Spanish bank, rose 4.3 percent after raising its guidance. On the downside, IG Group, the UK trading platform, fell 8.5 percent on news it will acquire TastyTrade, the US online brokerage.

Asia Pacific

Most major Asian markets closed higher Thursday broadly in line with gains on Wall Street as investors anticipate bigger fiscal stimulus under the Biden administration. Regional data published Thursday were also broadly positive, while the Bank of Japan left policy on hold.

The Shanghai Composite index outperformed with an increase of 1.1 percent, while Hong Kong's Hang Seng index fell slightly and Australia's All Ordinaries index rose 0.8 percent. Japan's Nikkei and Topix indices closed up 0.8 percent and 0.6 percent respectively.

Japanese trade data showed ongoing weakness in imports but a rebound in exports in December, with the trade surplus widening to ¥751.0 billion from ¥366.8. Exports rose 2.0 percent on the year in December after dropping 4.2 percent in November, with the improvement in headline exports growth broad-based across major trading partners. Imports fell 11.6 percent on the year after dropping 11.1 percent previously.

The Australian labour market's recovery extended into December though public health restrictions and internal border controls continued to have an impact. The number of employed rose by 50,000 in December, the sixth increase in the last seven months but down from the 90,000 increase seen in November. The unemployment rate fell from 6.8 to 6.6 percent, its lowest level since April 2020

Looking ahead*

On Friday in Asia/Pacific, New Zealand CPI, Japanese CPI, Japanese PMI composite flash, and Australian retail sales reports are scheduled. In Europe, reports are due on UK public sector borrowing, UK retail sales, plus PMI composite flash data from France, Germany, Eurozone, and the UK. In North America, Canadian retail sales, US PMI composite flash, and US existing home sales reports are on tap.

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