Daily market review

United States

Positive momentum and hopes for recovery supported equities again Monday, with value outpacing growth. The Dow Jones industrial average gained 0.8 percent, the S&P 500 rose 0.7 percent and NASDAQ 100 was up 1.0 percent.

Treasury Secretary Janet Yellen's positive weekend comments on prospects for recovery were a tailwind for the market, along with expectations for a big stimulus package, and hopes for new vaccines ready to come online.

Among sectors, energy led the way higher on top of last week's gains, with supermajors leading on big gains in oil prices. Strong metals prices lifted industrial materials, and banks outperformed to lead financials higher. Airlines gave industrials a lift.

Weakness in Facebook, down 0.6 percent, and Google, off 0.2 percent, held back communications services. Health care showed relative weakness, along with consumer discretionary. Utilities lagged.

Among companies in focus, positive expectations on stimulus helped airlines, with Southwest up 4.4 percent. Paypal, the online payments company, rose 4.7 percent as bitcoin rallied on news Tesla would accept bitcoin payments and would buy $1.5 billion in the cryptocurrency.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.14 to US$60.59 while spot gold rose US$19.62 to US$1,830.23. The US dollar fell against most major currencies. The US Treasury 30-year bond yield was down 2 basis points at 1.96 percent while the 10-year note yield was unchanged at 1.17 percent.


Cyclicals and M&A activity led equities slightly higher Monday. The Europe-wide STOXX 600 firmed 0.3 percent, the German DAX was unchanged, the French CAC rose 0.5 percent, and the UK FTSE-100 was also up 0.5 percent.

Among sectors, basic resources, technology, oil & gas, banks, chemicals, construction, industrials, and autos outperformed, while lagging were utilities, food & beverage, real estate, telecom, retail, media, and health care.

In M&A news, UK chipmaker Dialog Semiconductor rallied 16 percent on news it would be acquired by Renesas, a Japanese rival. Bilfinger, the German engineering firm, rose 6 percent on reports it may be acquired. 1&1 Drillisch, the German telecom, rose 2.2 percent on news it may get more money for its services from Telefonica Deutschland.

On the downside, Inland Homes, the UK property manager, fell 9 percent on an earnings miss. Marks & Spencer, the UK retailer, fell 3.5 percent after an analyst downgrade. Rolls Royce declined 1.5 percent after saying it will suspend operations of its loss-making civil aerospace division during the summer.

In economic news, German industrial production was unchanged in December to undershot expectations but only after a stronger revised 1.5 percent bounce in November; output held in annual contraction at 2.4 percent.

Asia Pacific

A drop in local Chinese Covid-19 cases and hopes for faster economic recovery powered by US fiscal stimulus boosted equities Monday.

Japan's Nikkei 225 rallied 2.1 percent and the broader Topix advanced 1.8 percent, led by steelmakers, autos, and financials, with Kobe Steel up 18 percent after raising its guidance, Toyota Motors up 1.5 percent, and Sumitomo Mitsui Financial up 4 percent.

Chinese stocks advanced, with the Shanghai composite up 1.0 percent, as a reserve injection from the People's Bank of China reassured markets that the central bank is not tightening policy. Among sectors, materials and health care outperformed while financials lagged. Among companies, Great Wall Motors rose 9.7 percent on strong January auto production figures, and Sino Biopharmaceutical rose 0.7 percent after receiving provisional approval for its Covid vaccine.

Hong Kong shares edged up, with the Hang Seng index up 0.1 percent as net inflows from Mainland China remained strong, and investors reacted to better Covid news from China.

Australian shares rose on recovery hopes powered by the expected US stimulus, with rising commodities prices lifting mining shares. Australia's All Ordinaries index was up 0.7 percent.

Korea lagged with the KOSPI ending down 1 percent: Kia Motors dropped 15 percent and Hyundai Motors fell 6 percent on news they would not partner with Apple on autonomous cars, contrary to previous reports. Other Korean industrials fell too, with chipmaker SK Hynix off 2 percent.

Looking ahead*

On Tuesday in Europe, the following economic reports are due: German merchandise trade and Italian industrial production. In North America, the US JOLTS and US small business optimism reports are on tap.

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