Daily market review

United States

Equities weakened across the board Thursday as long-term interest rates continued to rise, with the US 10-year note yield breaking above 1.5 percent. The Dow Jones industrial average fell 1.8 percent, the S&P 500 lost 2.5 percent and the NASDAQ composite dropped 3.5 percent.

Fed officials chose not to push back on the uptick in yields, with Kansas City Fed President Esther George and St. Louis Fed President Jim Bullard saying rising yields show the Fed's efforts to revive the economy are working, and George explicitly saying the recent rise in yields does not warrant a policy response.

Mega-caps and growth stocks saw heavy losses, with technology off, led by a selloff among chipmakers, but value/cyclicals suffered too. Big laggards included technology, led by chipmakers, along with consumer discretionary and communication services. Utilities and consumer staples held up best but were lower.

Among the worst performers were Boeing, off 5.6 percent, and Intel, down 4.4 percent. Best Buy fell 9.3 percent and Domino's Pizza lost 7.1 percent on disappointing quarterly results. Among mega-caps, Apple dropped 3.5 percent, Amazon fell 3.2 percent, Facebook lost 3.6 percent, Microsoft lost 2.4 percent, and Tesla fell 8.1 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 10 cents to US$66.94 while spot gold fell US$29.17 to US$1,771.94. The US dollar strengthened vs. major currencies. The US Treasury 30-year bond yield was up 6 basis points at 2.30 percent while the 10-year note yield surged 14 basis points to 1.52 percent.


Rising bond yields pushed equities down slightly Thursday, with mixed earnings results in focus. The Europe-wide STOXX 600 declined 0.4 percent, the German DAX declined by 0.7 percent, the French CAC eased 0.2 percent, and the FTSE 100 was down 0.1 percent.

Among sectors, energy, basic resources, and insurance stocks fared best while lagging were health care, travel & leisure, and chemicals.

Among companies hurt by weak earnings, Bayer fell 6.3 percent, Standard Chartered was off 6.1 percent, and Anheuser Busch lost 5.9 percent. On the positive side, Cellink, the Swedish battery maker, and Poolia, the Swedish executive search firm, both rose 23 percent on blowout earnings.

In economic data, Eurozone economic sentiment showed a larger-than-expected improvement in February. At 93.4, the headline index more than reversed January's 0.9 point drop to record its highest reading since last March. Separately, the German GfK survey confirmed another deterioration in consumer sentiment in February but anticipated a modest improvement in March.

Asia Pacific

Fed Chair Jerome Powell's reassurance that the Fed is in no rush to tighten helped equities rebound Thursday after steep declines Wednesday.

Chinese indexes ended higher, with the Shanghai Composite index and the CSI300 both up 0.6 percent. The gains were limited by a report that China will weigh scaling back its pandemic support measures at upcoming Communist Party gatherings.

Sectors were mixed with real estate stocks outperforming on reports the government will press ahead with land reforms. Other outperforming sectors included financials, industrials, and utilities, while tech stocks and consumer staples lagged.

Meanwhile, Hong Kong rebounded from Wednesday's plunge, with the Hang Seng index up 1.2 percent, as investors moved past Wednesday's news that Hong Kong stamp duties on stock trades will rise. Real estate stocks led the winners, along with tech and financials.

Korean shares perked up on the Powell comments, with the KOSPI jumping 3.5 percent. Tech stocks outperformed, with chipmakers SK Hynix rallying 9.2 percent, and Samsung Electronics up 4 percent.

The Bank of Korea left its main policy rate unchanged at a record low of 0.50 percent at its policy meeting, in line with the consensus forecast. Officials cut the rate to this level in May 2020.

Japanese shares rebounded, with the Nikkei up 1.7 percent and the Topix up 1.2 percent on vaccine and recovery optimism, and carryover from the better showing on Wall Street. Best performer in the Nikkei was Fast Retailing, up 2.4 percent.

A rebound in oil and other commodities prices boosted Australian equities, along with supportive economic data. The All Ordinaries index gained 0.8 percent.

Most sectors were higher with iron ore miners leading. Among companies in focus, Ramsay Health Care rose 7.7 percent on an earnings beat, and telecom Telstra gained 1.3 percent.

In economic data, Australian private capital expenditures rose 3.0 percent on the quarter in the fourth quarter after falling 3.1 percent in the third quarter. This is the first quarterly increase in private capex since 2018 and the strongest since 2012.

Looking ahead*

On Friday in Asia/Pacific: New Zealand merchandise trade, Japanese industrial production, Japanese retail sales, Singapore industrial production, and Indian GDP figures are due. In Europe: Swiss employment, French consumer manufactured goods consumption, French CPI, French GDP, French PPI, Swiss GDP, Swiss leading indicator. In North America: US international trade in goods, Canadian industrial product index, US personal income and spending, US retail inventories, US wholesale inventories, Chicago PMI, and US consumer sentiment.

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