Daily market review

United States

Higher bond yields hurt equities again Thursday, with high-multiple growth stocks faring worst. The Dow Jones industrial average and the S&P 500 both declined 0.4 percent and the NASDAQ composite slipped 0.7 percent, though major indexes recovered from the day's worst levels.

Disappointing US jobless claims added to the day's negatives, along with a selloff in Walmart, down 6.5 percent, on an earnings miss and its warning that an easing in pandemic conditions will hurt sales.

Technology stocks led the declines: Apple down 0.9 percent, Microchip off 4 percent, and Adobe off 0.6 percent. Other lagging sectors included energy and financials. Holding up best were utilities.

Among companies hurt by disappointing earnings, Albemarle, the chemicals maker, was off 10 percent, and Mosaic, the miner, declined 9 percent. Among Dow stocks, worst off were Disney down 1.9 percent, Caterpillar down 1.2 percent, and Boeing off 3.3 percent.

In US economic data, jobless claims rose 13,000 for the February 13 week with a steep 55,000 upward revision to the prior week. The current level, at 861,000, is back to where it was in December and before that in September.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.05 to US$63.38 while spot gold fell 72 cents to US$1,774.50. The US dollar fell vs. major currencies. The US Treasury 30-year bond yield was up 4 basis points at 2.08 percent while the 10-year note yield was up 1 basis point at 1.29 percent.


Rising bond yields hit equities Thursday along with weakness on Wall Street. The Europe-wide STOXX 600 fell 0.8 percent, the German DAX slipped 0.2 percent, the French CAC lost 0.7 percent, and the UK FTSE-100 dropped 1.4 percent.

UK markets lagged as exporters were hurt by a rise in sterling which got a lift from a 5 basis point rise in the 10-year Gilt to 62 percent. Among sectors, autos, retail, real estate, and technology held up best while worst off were oil & gas, banks, utilities, insurance, telecom, health care, industrials, media, and travel & leisure.

Among companies in focus, Daimler rose 2.1 percent on an earnings beat. On the downside, Royal Dutch Shell dropped 3 percent after announcing a sale of assets. Electricite de France lost 2.9 percent, and Nestle, the Swiss food giant, fell 1.1 percent on an earnings misses. Air France KLM declined 0.3 percent as it warned on the impact of renewed travel restrictions.

Asia Pacific

Equities ended mostly weaker Thursday amid concerns about high valuations and less generous central bank policy, with Hong Kong and Korea lagging. Strong US economic data and higher US Treasury yields raised concern about the prospect of tightening from major central banks.

Chinese markets were mixed on their first day back from New Year holidays with the Shanghai composite up 0.6 percent but the CSI300 index down 0.5 percent. Risk appetite was dented when the People's Bank of China drained liquidity through its daily open market operations, although it was more generous with medium-term financing. Equity sectors were mixed with a better showing from value stocks including financials, materials, and energy, while health care and consumer staples lagged.

Hong Kong stocks gave up early gains, with the Hang Seng index closing down 1.6 percent, paced by selloffs in technology, industrials, and health care. Korea's Kospi fell 1.5 percent.

Japanese markets gave up early gains to end lower as investors appeared cautious about big recent gains. The Nikkei 225 index eased 0.2 percent and the Topix was down 1.0 percent. Among the day's winners were Chugai Pharmaceutical, up 2.2 percent after refiling a patent infringement claim, and Takeda Pharmaceutical, up 0.7 percent on news of an expansion in Ireland.

Australian shares seesawed to end unchanged. On a busy day for earnings, NRW, the mining services firm, dropped 17 percent and Woodside Petroleum fell 2.4 percent, both after earnings misses. On the positive side, Treasury Wine Estates rose 17 percent on better guidance, and CSL, the health care business, rose 3 percent on an earnings beat.

Looking ahead*

On Friday in Asia/Pacific, Chinese loan prime rate, New Zealand PPI, Australian retail sales, Japanese CPI and Japanese PMI composite flash figures are due. In Europe, UK public sector finances, German PPI, UK retail sales, French CPI, French PMI composite flash, German PMI composite flash, Eurozone PMI composite flash, Italian CPI, UK PMI composite flash, and UK CBI industrial trends figures are scheduled. In North America, Canadian retail sales, US PMI composite flash, and US existing home sales reports are on tap.

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