Daily market review

United States

Very strong US economic data and rising US Treasury yields undercut equity sentiment Wednesday and added to concerns over fading central bank support. Growth stocks lagged while value held up better. The Dow Jones industrial average rose 0.3 percent, the S&P 500 was flat, and NASDAQ composite slipped 0.6 percent.

Technology was the day's laggard on weakness in chipmakers and software, with Apple also down 1.8 percent. Transportation stocks hurt industrials, with JB Hunt off 1.7 percent. Communications services were mixed, as Netflix fell 1.1 percent.

On the positive side, health care ticked up on gains in pharma, with Merck up 1.7 percent. Consumer staples outperformed on strength in drug stores; CVS rose 3.1 percent in a rebound from Tuesday's selloff. Energy topped the market led by oil supermajors: Exxon Mobil up 1.6 percent.

In US economic data, retail sales blew away expectations with a gain of 5.3 percent showing across-the-board strength. Producer prices rose 1.3 percent, also surpassing Econoday's consensus forecasts and marking the largest increase since the current index began in December 2009. Separately, at plus 0.9 percent, industrial production beat Econoday's high estimate.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 94 cents to US$64.43, while spot gold fell US$24.22 to US$1,775.23. The US dollar rose vs. major currencies. The US Treasury 30-year bond yield was off 4 basis points at 2.05 percent while the 10-year note yield was down 2 basis points at 1.29 percent, as rates receded from recent highs.


Equities retreated Wednesday with rising bond yields spurring concerns about inflation and fading central bank policy support. The Europe-wide STOXX 600 eased 0.7 percent, the German DAX slipped 1.1 percent, the French CAC eased 0.4 percent, and the UK FTSE-100 eased 0.6 percent.

Worries about lockdowns in Europe and the slow rollout of vaccines added to negative sentiment. Lagging sectors were retail, technology, financial services, construction, media, and travel & leisure. Best performers included oil & gas, utilities, food & beverage, telecom, real estate.

Among companies in focus, Kering, the French luxury goods group, fell 6.7 percent on disappointing sales. British American Tobacco fell 4.8 percent on gloomy guidance. Scandic Hotels fell 2.5 percent on Covid concerns. Bic, the French consumer goods leader, fell 4.7 percent on an earnings miss.

On the positive side, Total Produce, the Irish food company, rose 27 percent on news it will be acquired by Dole Food Company. M6 Metropole, the French media business, rose 13 percent, and Immunovia the Swedish biotech, rose 4 percent on earnings beats.

Asia Pacific

Equities were mixed Wednesday as Hong Kong extended recent gains on both recovery hopes and better pandemic news in China while other markets faced profit-taking pressures.

Hong Kong stocks outperformed as investors anticipated renewed buying from Mainland China once Shanghai markets reopen Thursday after extended Lunar New Year holidays. The Hang Seng index gained 1.1 percent, paced by technology stocks.

South Korean markets lagged as Covid cases picked up again and the Korean won weakened. Investors also focused on rising US Treasury yields and concerns that reflation efforts may be excessive. The KOSPI declined 0.9 percent, although it ended well above the day's lows.

Japanese equities retreated on profit-taking after the Nikkei 225 moved above 30,000 earlier in the week for the first time in 30 years. The Nikkei slipped 0.6 percent on the day but still held above 30,000 at 30,292; the Topix eased 0.2 percent. Heavily-weighted chipmakers led the selloff. Hyundai Motors was a notable decliner, down 1.6 percent on news of a fire in one of its electric buses.

Australia's All Ordinaries weakened on a selloff in precious metals miners. Value/cyclicals outperformed to limit losses elsewhere. Energy stocks were the only rising sector as oil prices gained.

Among companies in the news, Charter Hall Group, the REIT, fell 7 percent, and Coles, the grocer, lost 5.4 percent, as both reported earnings misses. Newcrest Mining, the gold miner declined 4.5 percent.

Indian shares retreated with the Nifty down 0.7 percent and the Sensex off 0.8 percent as investors continued to take profits on banks and other sectors that have rallied on recovery hopes. Nestle India fell 2.8 percent on an earnings miss.

Looking ahead*

On Thursday in Asia/Pacific, Australian labour force survey is due. In Europe, Swiss merchandise trade, Eurozone EC consumer confidence flash, and ECB meeting minutes are scheduled. In North America, US housing starts, US jobless claims, Philadelphia Fed, and US import/export price reports are on tap.

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