Daily market review

US trims losses on Fed comments; Europe flat to weaker; Asia mixed

United States

Soothing words from Fed Chair Jerome Powell helped equities recover Tuesday from an early selloff in growth stocks and on rising bond yields. The Dow Jones industrial average was flat, the S&P 500 firmed 0.1 percent and the NASDAQ composite fell 0.5 percent.

Tech mega-caps led the way down at the open, with the NASDAQ off nearly 4 percent, but buyers emerged after Powell pledged again that the Fed would move "patiently" and with plenty of notice before it would firm monetary policy. Powell downplayed inflation and financial stability risks, and suggested rising bond yields show market confidence in the outlook and Fed policies.

Among sectors, technology and consumer discretionary fared worst while energy outperformed, followed by communications services and defensive sectors.

Among companies in the news, Zoominfo, the software company, rose 4.1 percent on a blowout earnings and revenues report. Extra Space Storage gained 4.8 percent on an earnings beat. On the downside, Nautilus, the exercise equipment maker, dropped 23 percent on disappointing revenues. Shoe company Crocs fell 3.8 percent after flagging weakness in non-US business.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 65 cents to US$65.86 while spot gold fell US$2.93 to US$1,805.49. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield was up 1 basis point at 2.19 percent while the 10-year note yield was flat at 1.35 percent.

Europe

Another uptick in bond yields undercut equities Tuesday, with technology and other growth stocks lagging, and corporate results in focus. The Europe-wide STOXX 600 declined 0.4 percent, the German DAX fell 0.6 percent, and the French CAC and the UK FTSE-100 both firmed 0.2 percent.

UK markets continued to derive support from the UK government's announced plans to phase out its pandemic restrictions. Rising commodities prices added to the recovery narrative that has pushed bond yields higher and has bolstered energy and basic resources stocks.

Among sectors, best were retail, real estate, banks, oil & gas, and personal & household goods, while lagging were tech, autos & parts, health care, industrials, telecom, and travel & leisure.

Among companies in the news, Bankinter, the Spanish lender, rose 8 percent on news it will spin off and list its insurance unit soon. EasyJet rose 4.5 percent on rising bookings after the UK eased its lockdown. Royal Unibrew, the Danish brewer, rose 2.4 percent on an analyst upgrade. On the downside, earnings misses hit Paradox Interactive, the Swedish video game maker, off 22 percent, SIG Combibloc, the Swiss packaging firm, down 2.4 percent, and GHP, the Swedish health care provider, off 8.5 percent.

Asia Pacific

Equities were mixed Tuesday with technology stocks extending Wall Street's declines while banks and commodities improved. Activity was diminished as Japan was on holiday.

China ended slightly weaker as rising bond yields kept growth stocks under pressure while financials and miners held up better. The Shanghai composite eased 0.2 percent and the CSI300 index slipped by 0.3 percent. Markets remained focused on an expected shift in Chinese monetary policy toward a more restrictive stance as the recovery unfolds.

Gains in financials and energy stocks on recovery hopes helped Hong Kong outperform with the Hang Seng index up 1.0 percent. Among companies in focus, HSBC firmed 0.4 percent on mixed quarterly results as it reinstated its dividend but guided its long-term profitability down.

Rising bond yields and worries about a bigger correction ahead in stock prices held back Korean markets as the KOSPI eased by 0.3 percent. Big Korean tech stocks remained under pressure on carryover from weakness in US and Chinese techs, with Samsung Electronics off 0.3 percent.

The ongoing rally in commodities helped Australian equities outperform with the All Ordinaries index up 0.7 percent and the S&P/ASX 200 up 0.9 percent. The big four banks and the big commodities giants led the winners, along with travel firms on recovery hopes paced by the rollout of vaccines. Miners BHP rose 0.7 percent and Rio Tinto gained 1.8 percent.

Looking ahead*

On Wednesday in Asia/Pacific, Australian wage prices and Hong Kong GDP are due, plus the Reserve Bank of New Zealand policy announcement. In Europe, German GDP and French business climate indicator figures are scheduled. In North America, Fed Chair Jerome Powell will speak for a second day and the US new home sales report is on tap.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

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