Daily market review

United States

Equity indexes ended mixed to higher Monday in choppy trading with Apple and defensive stocks gaining while cyclicals and most sectors weakened. The Dow Jones industrial average eased 0.1 percent, the S&P 500 rose 0.4 percent, and the NASDAQ 100 rose 0.7 percent.

Risk-off sentiment emerged from uncertainty over the fate of the Biden stimulus plan, reports of new Covid-19 strains, slow rollout of vaccines, new restrictions on travel into the US, and news that Merck, the big vaccine-maker, had shuttered its Covid vaccine program. Still, dip-buying emerged at the lows, and major indexes recovered from morning losses.

On the positive side, Apple, up 2.8 percent, was in focus on expectations for another strong iPhone showing in quarterly earnings due Wednesday, while investors are expecting good results from Tesla, Microsoft, and Facebook, also due this week.

Defensives including utilities and real estate were strong, plus health care, led by pharma, including Moderna, which rallied 12 percent after it said its Covid-19 vaccine protects against some new Covid variants.

On the downside, energy lagged the most with oil services suffering as Haliburton declined 3.2 percent. Financials lagged on weakness in banks and credit card companies, with American Express down 4 percent. Communications services slipped with Google down 0.1 percent and Netflix off 1.5 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 64 cents to US$55.85 while spot gold rose 92 cents to US$1,855.64. The US dollar rose against most major currencies. The US Treasury 30-year bond yield declined 5 basis points to 1.80 percent while the 10-year note fell 5 basis points to 1.03 percent.


Covid worries hit stocks again Monday, with cyclicals off the most as investors fear a delayed economic recovery. The Europe-wide STOXX 600 skipped 0.8 percent, the German DAX fell 1.7 percent, the French CAC declined 1.6 percent, and the UK FTSE-100 was down 0.8 percent.

Widespread discussion of dangerous Covid-19 mutations weighed on risk appetite, along with slow rollout of vaccines, more extended lockdowns and new travel restrictions.

Sentiment was dented by unexpectedly weak German business sentiment figures, with the Ifo business climate index dipping to 90.1 in January from 92.2 in December, a response to Covid lockdowns. Among sectors, lagging the most were energy, travel & leisure, banks, and automakers, while telecom and health care held up best.

Among airlines hit by travel restrictions, Lufthansa was off 3.5 percent and RyanAir fell 4.1 percent. Among banks, Deutsche Bank fell 4.1 percent on news it was probing possible mis-selling of investment banking services.

On the positive side, Jenoptik, the German optical products maker, rose 9.5 percent on stronger guidance. Siemens Energy, the German turbine maker, rose 3.5 percent, and CEWE, the German photo processor, rose 10 percent on an earnings beat.

Asia Pacific

Major Asian markets closed higher Monday, with the regional data calendar light but investor sentiment supported by hopes that the ongoing Covid-19 vaccine rollout and US fiscal stimulus will support global economic recovery.

Hong Kong's Hang Seng index outperformed, closing up 2.4 percent, with shares of the electric car division of conglomerate Evergrande Group surging after the company announced a share placement. Japan's Nikkei and Topix indices advanced 0.7 percent and 0.3 percent respectively, while Australia's All Ordinaries index and the Shanghai Composite index both rose 0.5 percent.

Singapore's headline consumer price index was unchanged on the year in December after dropping 0.1 percent in November, reflecting offsetting moves among major components with prices for food and services weakening and private transport costs strengthening. MAS officials continue to expect price pressures will remain subdued in the coming months.

Looking ahead*

On Tuesday in Asia/Pacific, Bank of Japan policy board minutes, Singapore industrial production, and Hong Kong merchandise trade reports are scheduled. In Europe, UK labour market and UK CBI distributive trades reports are due. In North America, US Case Shiller housing prices, US FHFA housing prices, US consumer confidence, and US Richmond Fed manufacturing reports are on tap.

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