Daily market review

United States

Equities continued their rebound Tuesday, building on Monday's recovery from last week's steep selloff, and as earnings continued to come in strong. The Dow Jones industrial average and NASDAQ both rose 1.6 percent while the S&P 500 rose 1.4 percent.

Gains were across the board, with cyclicals/value stocks outpacing growth. Best performers included energy, with oil prices up. Other winners were consumer discretionary, financials, and internet stocks. Lagging were materials, as metals prices fell back, consumer staples, health care, technology, and real estate.

Among stocks in focus, Exxon Mobil rose 1.6 percent after beating earnings expectations despite a whopping loss. UPS rose 2.6 percent after a beat. Emerson Electric rose 3.7 percent after topping estimates. On the downside, Pfizer fell 2.3 percent after a miss though it raised guidance. Harley Davidson was a big loser, down 17 percent after swinging to a surprise loss.

GameStop, down 60 percent, and other stocks driven higher in the retail trading frenzy fell back as the short squeeze ebbed.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.13 to US$57.54 while spot gold fell US$23.26 to US$1,835.67. The US dollar steady against most major currencies. The US Treasury 30-year bond yield was up 2 basis points at 1.87 percent while the 10-year note yield rose 3 basis points at 1.10 percent.


Equities perked up Tuesday as focus returned to hopes for US stimulus and upbeat earnings. The Europe-wide STOXX 600 rose 1.3 percent, the German DAX rose 1.6 percent, the French CAC gained 1.9 percent, and the UK FTSE-100 was up 0.8 percent.

Among sectors, outperformers were travel and leisure, banks, and financial services, while lagging were telecom and basic resources. UK markets lagged on a drop in BP after disappointing quarterly results, and a pullback in miners after Monday's sharp gains paced by a short-lived rally in precious metals.

The recent focus on dislocations spurred by an online retail trading frenzy appeared to have passed for now. Markets also reacted favorably to reports that US vaccinations have picked up, even as European vaccinations lag. On the downside were more reports of virus mutations which raised concern about the effectiveness of vaccines.

Among stocks in the news, French luxury goods giants Kering rose 2.0 percent and LVMH gained 2.6 percent after an upgrade at Berenberg. German chemicals giant Wacker Chemie rose 3.8 percent on an earnings beat. Telenor, the Norwegian telecom, rose 3.2 percent after topping earnings expectations.

On the downside, BP fell 4.5 percent after an earnings miss. Fresenius Medical Care, the German dialysis company, fell 9.6 percent after lowering its guidance.

Asia Pacific

Equities advanced again Tuesday on follow-through from Monday's Wall Street rally. Australian and Indian markets outperformed on supportive government policies, and Hong Kong was bolstered by continued private capital flows from China.

Australia's S&P/ASX 200 index rose 1.5 percent after the Reserve Bank of Australia boosted its bond buying program and pledged to keep rates on hold until inflation reaches its target.

In India, the S&P BSE Sensex popped up 2.5 percent and the NSE Nifty 50 rose 2.6 percent after the government revealed big fiscal stimulus plans including infrastructure spending to offset the pandemic's effects.

In Hong Kong, the Hang Seng index rose 1.2 percent with industrials and consumer discretionary stocks leading amid ongoing strong demand from Mainland Chinese investors.

Chinese stocks also advanced, with the Shanghai Composite up 0.8 percent. The People's Bank of China's relatively generous reserve injection Tuesday reassured markets the central bank was not moving toward a tighter policy stance.

Japanese markets advanced with support from positive earnings expectations. The Nikkei 225 index gained 1.0 percent and the broader Topix rose 0.8 percent. Among companies reporting, Nintendo retreated 0.4 percent a day after posting blowout quarterly results and raising its guidance, while Panasonic, up 3.1 percent, beat market expectations in earnings posted after the close.

Looking ahead*

On Wednesday in Asia/Pacific, New Zealand labour market conditions, Hong Kong PMI, Singapore PMI, China PMI composite, Japanese PMI composite final, and India PMI composite reports are scheduled. In Europe, PMI composite final reports are due from France, Germany, Eurozone, UK, plus Eurozone HICP flash, Eurozone PPI, and Italy CPI. In North America, reports on US ADP employment, US PMI composite final and US ISM services are on tap.

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