Daily market review

United States

Equities were mixed to weaker Monday with growth stocks sinking and value/cyclicals holding up better on recovery hopes. The Dow Jones industrial average rose 0.1 percent, the S&P 500 fell 0.8 percent and the NASDAQ composite dropped 2.5 percent.

Higher bond yields remained the market focus as investors reacted to expectations for US fiscal stimulus, plus favorable headlines on slowing Covid cases and positive findings on vaccines.

Among sectors, utilities, technology, consumer discretionary, and health care lagged while energy outperformed as oil and other commodities rallied. Financials, industrials, materials, and machinery also outperformed.

Higher bond yields and valuation worries weighed most on mega-caps and growth stocks, which dampened the overall market. Apple was off 3 percent, Microsoft was down 2.7 percent, and Tesla down 8.6 percent, while old-fashioned banks and other financials were notable winners, with Bank of America up 1.8 percent, and Discover Financial up 1.6 percent.

Among companies in focus, American Airlines rose 9.4 percent on an upgrade at Deutsche Bank on the improved Covid outlook. Principal Financial Group rose 8.1 percent on a report that activist investor Elliott Management had acquired a big stake.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$2.53 to US$65.21 while spot gold rose US$27.02 to US$1,808.42. The US dollar was mostly weaker vs. major currencies. The US Treasury 30-year bond yield was up 5 basis points at 2.18 percent while the 10-year note yield was up 1 basis point at 1.35 percent.


European equities recovered early steep losses to end flat to weaker Monday as bond yields fell and stocks perked up on comments from ECB President Christine Lagarde. The Europe-wide STOXX 600 declined 0.4 percent, the German DAX eased 0.3 percent, the French CAC eased 0.1 percent, and the UK FTSE-100 slipped 0.2 percent.

Major stock indexes fell about 1 percent early Monday as a rally in commodities added to concerns about inflation and as bond yields rose further. Then yields declined on Lagarde's comment that the ECB is watching nominal bond yields, raising talk that the ECB, in a move to push down yields, may be more likely to step up asset purchases.

Among sectors, travel & leisure outperformed to lead a recovery in UK stocks from an early selloff after Prime Minister Boris Johnson unveiled plans to ease pandemic restrictions. Ryanair, the budget airline, rose 4.5 percent and InterContinental Hotels gained 5 percent on the news.

Other sectors outperforming included oil & gas, insurance, banks, media, and real estate. Lagging were technology, utilities, retail, health care, personal goods, food, and autos & parts.

Among companies in the news, Kuehne & Nagel, the Swiss logistics firm, rose by 2.2 percent on news it will buy Apex, the Chinese freight business. Landis & Gyr, the Swiss electric grid servicer, rose 1.5 percent on news of a big sale in Kansas. On the downside, Continental, the French auto parts maker, fell 2 percent after recommending a dividend suspension.

In economic news, February's Ifo survey found a pick-up in overall German business sentiment as the headline climate indicator rose 90.3 in January to 92.4, its first increase since last September and its highest mark since October. The measure now stands 3.4 points short of February's pre-pandemic level.

Asia Pacific

Equities were mixed but mostly weaker as Chinese markets led a selloff on concerns over valuation, rising bond yields, and tightening financial conditions, while Japan held up better.

China dropped as speculation resumed over official steps to reduce liquidity, combined with perceptions that market valuations remain stretched. The Shanghai composite fell 1.5 percent and the CSI300 index dropped 3.1 percent with investors rotating out of growth into value sectors.

Worries over Chinese financing conditions resumed after China tightened rules on funding for online lenders, and raised capital requirements for banks lending to the tech platforms. China left its prime lending rate unchanged over the weekend.

Separately, Korea gave up early gains to end lower on worries over rising bond yields, and as concerns over Chinese financing conditions spilled over. The KOSPI ended down 0.9 percent after rising 1 percent earlier.

Australia ended flat as rising commodities prices lifted materials to offset weakness elsewhere. The All Ordinaries index was unchanged and the S&P/ASX 200 eased 0.2 percent. Growth stocks suffered as bond yields spiked sharply. Health care and information tech stocks lagged while miners rose, with Rio Tinto up 3.6 percent, and BHP up 3.3 percent.

On the positive side, Japan's Nikkei and the broader Topix both rose 0.5 percent, with cyclicals outperforming as positive vaccination news spurred the recovery trade. Airlines and marine shipping were among the day's best performers, along with banks.

Looking ahead*

On Tuesday in Asia/Pacific, New Zealand retail trade and Singapore CPI are due. In Europe, UK labour market, Swiss producer prices, Eurozone HICP, and UK CBI Distributive Trades figures are scheduled. In North America, Fed Chair Jerome Powell will speak, plus US Case-Shiller home prices, US FHFA home prices, US consumer confidence, and US Richmond Fed manufacturing reports are on tap.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies