Daily market review

United States

Equities ended flat to better Friday with value/cyclical stocks outperforming growth as earnings remained in focus. The Dow Jones industrial average firmed 0.1 percent, and the S&P 500 and NASDAQ composite were both up 0.5 percent.

Heading into the weekend, major indexes held near record highs as sentiment remained bolstered by declining US Covid-19 case counts, ongoing rollout of vaccinations, fiscal stimulus hopes, and mostly strong earnings. On the negative side, concerns continue over high valuations and speculative froth.

Best performing were materials, financials, industrials, health care, and energy. Lagging were real estate, utilities, and consumer discretionary.

Among companies in focus, Illumina, the biotech, surged by 12 percent on an earnings beat. Paypal, the online payments leader, rose 4.7 percent after an upbeat management presentation. On the downside, Disney fell 1.7 percent, despite a surprise earnings beat, to depress communications services. Survey Monkey dropped 13 percent, and Datadog, the cloud computing security company, fell 4 percent on disappointing guidance for both firms.

In US economic data, a sharp 2.8-point drop pulled the consumer sentiment index to its lowest point since August, a loss the report attributed to falling expectations among households with incomes below $75,000.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.79 to US$62.60, while spot gold fell US$5.23 to US$1821.16. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield was up 7 basis points at 2.01 percent while the 10-year note yield was up 4 basis points at 1.21 percent.


Equities edged up Friday with support from earnings and a decent showing on Wall Street. The Europe-wide STOXX 600 gained 0.6 percent, the German DAX firmed 0.1 percent, the French CAC also rose 0.6 percent, and the UK FTSE-100 advanced 0.9 percent.

UK markets outperformed after UK GDP figures surprised to the upside. Weakness in Volkwagen held back German markets. Italy's FT-MIB rose 0.4 percent after Italy's 5Stars party backed the incoming government of former ECB President Mario Draghi.

On the negative side were concerns about new more highly transmissible forms of the coronavirus, and news that Germany would reinstate border controls to control the pandemic. Investors also faced persistent worries that equity valuations remain stretched.

Among sectors, health care, media, and technology outperformed. Lagging were retail, auto and parts, and real estate.

Among companies in focus, Dutch bank ING Groep gained 6.7 percent on an earnings beat. Eutelsat Communications rose 6.1 percent on a revenues beat and improved guidance. L'Oreal, the French cosmetics firm, rose 3 percent after topping revenues expectations. On the downside, Danone, the French food company, fell 1.1 percent after an activist investor raised management concerns. Automaker Volkswagen fell 1.7 percent on disappointing January sales.

In economic data, the UK economy grew by an unexpectedly strong 1.2 percent on the month in December. Following a shallower revised 2.3 percent decline in November, the December rebound lifted annual growth from minus 7.6 percent to minus 6.5 percent.

Asia Pacific

Asian markets were mixed in light trading Friday with Australia lagging on weakness in commodities prices, while China, Korea, and Hong Kong were on holiday.

Japan's market was flat to down as the market consolidated after four consecutive daily gains, with the Nikkei 225 down 0.1 percent and the broader Topix unchanged.

Japanese advancers included Toyota Motors, up 3.5 percent, and Renesas Electronics, up 3.4 percent on earnings beats, and Nintendo, up 3.1 percent on optimism over its launch of new video games. On the downside, Tokyu Corp., the Japanese conglomerate, slipped 1.7 percent after cutting its guidance and dividend, while Toshiba declined 0.7 percent after announcing cost cuts.

Meanwhile, a selloff in commodities and new Covid-19 lockdowns weakened Australian markets, with major indexes extending declines as the day progressed. The All Ordinaries index declined 0.6 percent, paced by miners BHP, down 1.7 percent, and Rio Tinto, down 1.2 percent.

India's NSE Nifty 50 index eased 0.1 percent while the S&P BSE Sensex was unchanged as a mixed showing by major stocks left the averages nearly flat. Software giants Infosys rose 1.3 percent and Wipro rose 1.1 percent on bargain-hunting, while ITC, the cigarettes and hotels conglomerate, fell 1 percent on disappointing quarterly results.

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