Daily market review

United States

Equities were mostly higher Wednesday, with value/cyclicals restored to their recent leadership position on the reopening trade. The Dow Jones industrial average rose 1.5 percent while the S&P 500 gained 0.6 percent, and the NASDAQ was flat.

Focus on recovery, with passage of the $1.9 trillion fiscal stimulus package, and more positive news on vaccine progress, helped value/cyclicals led by financials, materials, and energy. US consumer prices matched expectations to ease worries about an outsized acceleration in inflation. Tech stocks lagged again, as their recent bounce from oversold conditions ran out of steam.

Among sectors, oil services and supermajors led energy higher, and banks boosted financials in a rebound from Tuesday's selloff. Materials were strong, and big pharma gave health care a lift, with vaccine makers Pfizer up 1.4 percent and Johnson & Johnson up 0.9 percent. Industrials were in line. Lagging were consumer discretionary, internets, and worst off was tech, with Apple down 0.9 percent after reportedly cutting iPhone orders.

Among companies in focus, General Electric dropped 5.4 percent after announcing a reverse stock split and confirming its sale of its aircraft leasing unit. On the positive side, Boeing rallied 6.4 percent on the GE aircraft deal, amid hopes for a recovery in air travel. United Natural Foods popped up 18 percent on an earnings beat, and Sunrun, the solar panel installer, rose 3.6 percent on an upgrade at Morgan Stanley. On the downside, Tupperware dropped 20 percent on an earnings miss.

In US economic news, consumer prices increased 0.4 percent in February, boosted by gasoline prices and continuing the acceleration that has been ongoing since last November. On a 12-month basis, inflation picked up to 1.7 percent from 1.4 percent, also in line with expectations and confirming the acceleration observed since the low point of 0.1 percent reached in May 2020. In an offset, however, core prices (ex-food and energy) missed expectations with the annual rate slipping a tenth to only 1.3 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 90 cents to US$68.18 while spot gold rose US$8.45 to US$1,725.11. The US dollar fell vs. major currencies. The US Treasury 30-year bond yield was unchanged at 2.25 percent while the 10-year note yield fell 2 basis points to 1.52 percent.


A mixed showing among sectors left most major equities indexes firmer Wednesday; vaccine progress, company earnings, and government stimulus provided support. The Europe-wide STOXX 600 gained 0.4 percent, the German DAX gained 0.7 percent, and the French CAC advanced 1.1 percent, and the FTSE-100 eased 0.1 percent.

Trading was cautious ahead of the European Central Bank policy council meeting Thursday as investors watch to see whether rising bond yields will spur a policy response. UK markets lagged on a selloff in miners as commodities dipped, with BHP off 2.7 percent and Rio Tinto down 2.9 percent.

Defensive sectors outperformed, including health care, telecom, retail, and personal & household goods. Lagging were basic resources, travel & leisure, technology, industrials, financials, and media.

Among companies bolstered by earnings, Scandinavian Tobacco rallied 11.5 percent, Salvatore Ferragamo rose 6.6 percent, Just Eat Takeaway gained 6.0 percent, and Adidas was up 3.7 percent. On the downside, Petra Diamonds declined 19 percent after finishing its recapitalization; Juventus, the football club, fell 8.1 percent after exiting the European League; and UK photo booth operator Photo-me fell 7.4 percent on a revenues miss due to the pandemic.

Asia Pacific

Asian equities closed narrowly mixed Wednesday as an early rally faltered and as cyclicals -- energy, miners, and financial stocks -- came under pressure.

Chinese shares were mixed, with health care and consumer staples providing a boost, while financials and real estate lagged. The Shanghai composite eased 0.1 percent while the CSI300 rose 0.7 percent.

In Hong Kong, tech stocks fared better after the big NASDAQ rally Tuesday and as US bond yields retreated. The Hang Seng ended up 0.5 percent, with tech advancing while energy, financials, and real estate fell back. Among companies in the news, HSBC declined 2.1 percent after a negative credit outlook from Moody's.

Japanese equities ended nearly flat Wednesday after the Wall Street technology rally fizzled in Tokyo. The Nikkei share average was unchanged and the Topix firmed 0.1 percent. Among sectors, paper, railways, and real estate fared best. Among companies in focus, Nippon Steel declined 2.5 percent after acquiring Tokyo Rope Manufacturing. Terumo eased 0.3 percent after giving up early gains on its improved syringes for Covid vaccines.

In Australia, banks, miners, and energy depressed equities, with the All Ordinaries index down 0.8 percent. Bank stocks suffered after RBA Governor Lowe appeared to rule out a near-term rate increase. A steep decline in iron ore prices hit miners. Information technology improved, with support from AfterPay, which rose 7.5 percent.

In Chinese economic data, the consumer price index fell 0.2 percent on the year in February after a decline of 0.3 percent in January, above the consensus forecast for a drop of 0.4 percent. The China's producer price index rose 1.7 percent on the year in February after increasing 0.3 percent in January.

Investors reacted favorably to news that US and Chinese diplomatic delegations were scheduled to hold a "reset" meeting soon in Anchorage, Alaska, halfway between the two countries. Separately, reports said the US wants to talk with Japan, Australia, and India on measures to contain China.

Looking ahead*

On Thursday in Asia/Pacific, Japanese PPI will be released. In Europe, the ECB policy announcement is scheduled. In North America, US jobless claims and JOLTS job openings are due.

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