Daily market review

United States

A recovery in growth stocks on quarter-end rebalancing helped major stock indexes rise Monday with the NASDAQ outperforming. The Dow Jones industrial average rose 0.3 percent, the S&P 500 gained 0.7 percent, and the NASDAQ rose 1.2 percent.

Value stocks lagged; financials were among the worst off after rallying in the first quarter on the recovery narrative, while growth stocks perked up as investors rebalanced headed into quarter end. A retreat in long-term bond yields contributed to the bid for growth stocks.

Among sectors, communications services and technology fared best, led by the FAANGs, while worst off, in addition to financials, were energy and utilities.

Among the day's big winners, Tesla rose by 2.3 percent, Apple 2.8 percent, Microsoft 2.5 percent, Facebook 1.2 percent, and Intel gained 2.9 percent. Among financials declining, Goldman Sachs fell 1.5 percent and JP Morgan dipped 2.7 percent.

Among companies in the news, Kansas City Southern, the railway, jumped 11 percent after news it will be acquired by Canada Pacific Railway. Zoom, the online meeting service, rose 0.7 percent on a buy recommendation at Goldman.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil eased 25 cents to US$64.35 while spot gold declined US$3.88 to US$1,738.93. The US dollar eased vs. most major currencies. The US Treasury 30-year bond yield declined 5 basis points at 2.39 percent while the 10-year note yield fell 4 basis points to 1.69 percent.


European equities were mixed. The Europe-wide STOXX 600 rose 0.2 percent, the German DAX firmed 0.3 percent, the French CAC declined 0.5 percent, and the FTSE-100 firmed 0.3 percent.

Rising Covid cases in France and Germany and expectations for renewed lockdowns hurt risk appetite, along with worries over vaccine supplies and uncertain take-up of the AstraZeneca vaccine. A selloff in the Turkish lira spurred concern about emerging markets contagion, and losses in firms with exposure to Turkey, after Turkish President Tayyip Erdogan fired the Turkish central bank governor for raising interest rates.

Among sectors, basic resources lagged the most, along with banks, retail, real estate, travel & leisure, insurance, construction, oil & gas, utilities, and media. Holding up best were technology, autos, health care, financial services, chemicals, and personal & household goods.

Among companies in focus, Air France lost 1.4 percent and Lufthansa declined 2.8 percent on fallout from expected renewed restrictions on travel. On the positive side, Volkswagen gained 7.2 percent on an analyst upgrade. Kingfisher, the UK retailer, rose 3.6 percent on a positive earnings surprise.

Asia Pacific

Asian markets were mixed Monday, with rising commodities prices bolstering Australia while Japan dropped in response to a pending change in the Bank of Japan's ETF purchases and worries over a shortage of microchips hitting auto manufacturing. Risk appetite was hurt by a drop in the Turkish lira on news its independent central bank chief had been sacked.

The Nikkei fell 2.1 percent while the Topix lost 1.1 percent as the market reacted to the BOJ announcement last week that it would only buy ETFs linked to the Topix, not the Nikkei. Japanese markets also were hit by news of a fire at chipmaker Renesas Electronics (down 4.9 percent), which added to worries about supply shortages. Honda was off 3.6 percent and Toyota fell 3.3 percent. Fast Retailing, which is most heavily weighted in the Nikkei, fell 4.5 percent.

Chinese markets were mixed, with mainland China mostly better while Hong Kong weakened.

China's Shanghai composite rose 1.1 percent while the CSI300 gained 0.7 percent, with value stocks outperforming led by financials. A speech by from People's Bank of China Governor Yi Gang was seen as less hawkish than feared. Yi said policy is aiming to provide adequate liquidity while limiting risks to financial stability. The PBOC left its loan prime rate unchanged.

Hong Kong's Hang Seng declined 0.4 percent on negative fallout from renewed lockdowns in Europe and concerns over US-China talks, which yielded no breakthrough and more harsh rhetoric from the two sides.

Meanwhile, Australian markets rose with the All Ordinaries index up 0.5 percent. Most sectors gained, led by energy and health care plus consumer discretionary, with casino operators rallying and Crown Resorts up 21 percent on news of a takeover offer from Blackstone. CSL, the biotech, rose 2.5 percent to lift health care. Materials lagged on a selloff in iron ore prices.

Looking ahead*

On Tuesday in Asia/Pacific, the Singapore CPI report is due. In Europe, UK labour market and UK CBI industrial trends reports are scheduled. In North America, Fed Chair Jerome Powell will speak, plus reports on US current account, US new home sales, and Richmond Fed manufacturing are on tap.

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