Daily market review

United States

Growth stocks retreated from early highs but outperformed, while value stocks remained under pressure Tuesday. The Dow Jones industrial average eased 0.4 percent while the S&P 500 slipped 0.2 percent, and the NASDAQ firmed 0.1 percent.

Lagging the most were energy, financials, industrials, and materials, while holding up best were communications services and technology, paced by Apple up 1.3 percent, Google up 1.3 percent, and Facebook up 2 percent. A late uptick in market interest rates appeared to knock growth stocks back from early highs while cyclicals that have rallied lately saw profit-taking pressure through the day.

On the downside, Chevron fell 2.4 percent with declining oil prices, Boeing was down 3.9 percent on profit-taking, and American Express declined 2.5 percent as financials gave back some recent gains. Carnival, the cruise line, declined 5.1 percent after a big rally on the reopening trade over the last month.

In US economic news, retail sales understandably fell back in February after January's surge on federal stimulus payments and presumably ahead of March's surge on another round of stimulus payments. Retail sales fell 3.0 percent on the month in February which was deeper than expected but followed an upwardly revised gain of 7.6 percent in January.

Meanwhile, industrial production sank 2.2 percent in February with manufacturing volumes down 3.1 percent. These are much deeper declines than expected with the Federal Reserve, which publishes the report, saying severe weather in the south central region (which includes Texas and the state's power shutdown) accounted for the bulk of the decline.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 53 cents to US$68.32 while spot gold firmed US$1.19 to US$1,732.75. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield rose 2 basis points at 2.38 percent while the 10-year note yield was flat at 1.61 percent.


Equities firmed Tuesday with autos leading and commodity stocks weaker. The Europe-wide STOXX 600 rose 0.8 percent, the German DAX gained 0.7 percent, the French CAC firmed 0.3 percent, and the FTSE-100 was up 0.8 percent.

Auto & parts, real estate, financial services and health care outperformed. Energy and basic resources lagged as commodity prices slipped, with Royal Dutch Shell off 1.7 percent and BP down 1.6 percent.

Among companies in the news, Volkswagen rose 5.9 percent after saying cost cuts would improve its bottom line. Iliad, the French telecom, rose 4.5 percent on better profits guidance. AstraZeneca gained 3.2 percent on reports some European countries may soon resume use of the company's Covid vaccine, and a report Canada is poised to expand its use.

On the downside, Morphosys, the German biotech, fell 9.2 percent after cutting its revenue outlook. Wacker Chemie, the German chemicals maker, fell 6 percent on weaker guidance.

In economic news, German ZEW's March survey found financial analysts more optimistic about the current state of the German economy and the medium-term outlook.

Asia Pacific

Monday's uptick on Wall Street carried over into Asian equities Tuesday, with technology and growth stocks leading.

China's Shanghai composite gained 0.8 percent while the CSI300 rose 0.9 percent. Outperforming were real estate, consumer staples, finance, and health care. Concerns about tighter policy limited the gains, along with signs the government is stepping up regulatory controls on media and fintech firms. The Wall Street Journal reported the government has asked Alibaba to shed some of its extensive media assets, amid concern over the company's influence on Chinese public opinion.

Hong Kong stocks tracked Mainland China markets higher with the Hang Seng up 0.7 percent, paced by big tech and consumer stocks. Lagging were finance, property, and energy.

Tech stocks led Japanese equities higher, with the Nikkei share average up 0.5 percent and the Topix up 0.7 percent. Sony, up 1.6 percent, and SoftBank, up 2.4 percent, were the day's best performers. Investors remain focused on global recovery hopes, paced by better news on Covid-19 infection rates and vaccinations.

Travel stocks tracked US travel stocks higher; Japan Airlines rose 3.9 percent and ANA was up 2.4 percent after US airlines reported a rebound in ticket sales.

Australia's All Ordinaries index rose 0.9 percent in response to Monday's gains on Wall Street, led by technology, health care, and financials. Afterpay, the fintech, rose 3.1 percent while CSL, the biotech, gained 2.3 percent. Markets reacted favorably to minutes from the Reserve Bank of Australia reaffirming the RBA's patient policy stance.

Among companies in focus, China Evergrande Group rose 1.6 percent on news it will work with Tencent on systems for autonomous vehicles and Mitsui High-tec gained 9.1 percent on an earnings beat. China Mobile rose 1.9 percent on a report it will list in Shanghai after its delisting in the US. On the downside, LG Chemical fell 7.8 percent after reporting Volkswagen will not use its batteries. Mizuho Financial declined 1 percent after delaying a planned leadership change.

Looking ahead*

On Wednesday in Asia/Pacific, Japanese and Singaporean merchandise trade reports are due. In Europe, the Eurozone HICP report is scheduled. In North America, the FOMC policy announcement and Fed chair press conference is the main event, plus US housing starts and Canadian CPI figures are due.

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