Daily market review

United States

Stocks were mixed Wednesday with value beating growth to reverse the recent pattern. Falling into the close, the Dow Jones industrial average was unchanged, the S&P 500 was off 0.6 percent, while the NASDAQ dropped 2.0 percent.

Worst off were the heavily-weighted FANMAG stocks, with technology, communications services, and consumer discretionary lagging. Among value sectors, financials, industrials, and materials fared best, plus energy stocks were leading gainers as they tracked oil prices higher.

Among the day's best, airlines led industrials along with materials. Financials outperformed with banks rebounding from last week's selloff. Health care lagged, with pharma down including vaccine maker AstraZeneca which fell 1.2 percent. Entertainment stocks depressed communications services, with Viacom/CBS plunging 23 percent after pricing a big share offering.

Among companies in focus, Intel slipped 2.3 percent after saying it will spend big on foundry plants to make chips for other chip designers that can't manufacture for themselves. Steelcase, the furniture maker, fell 1.2 percent on weaker guidance; Adobe, the software leader, declined 1.9 percent despite an earnings beat and better guidance; Gamestop, the Reddit favorite, plunged 34 percent as it actually reacted to poor earnings and revenue.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$3.56 to US$64.01 while spot gold rose US$5.83 to US$1,733.89. The US dollar rose vs. most major currencies. The US Treasury 30-year bond yield declined 3 basis points to 2.30 percent and the 10-year note yield declined 1 basis point to 1.62 percent.


Extended anti-Covid lockdowns in Europe and vaccine rollout problems hurt risk appetite Wednesday, but upbeat Eurozone economic reports helped markets recover to end mostly flat.

The Stoxx 600 pan-European index and the French CAC were both flat, the German Dax eased 0.4 percent, and the UK FTSE 100 firmed 0.2 percent.

In economic data, consumer confidence in the Eurozone improved in March, up 4.0 points to a far better-than-expected reading of minus 10.8 and now very near its historical average. And Eurozone business activity had a surprisingly good March: at 52.5, the flash composite was well above the market consensus and up sharply from February's final 48.8. It was also indicative of positive growth for the first time in six months, paced by strength in manufacturing.

In earnings, Commerzbank rose 1.8 percent on better guidance. Chipmakers advanced, with Infineon up 0.4 percent as semiconductor stocks responded favorably to Intel's announcement that it would resume making chips for others. On the downside, Halma, the UK safety equipment maker, fell 1.4 percent despite raising profits guidance. Leonardo, the Italian aerospace company, dropped 7 percent after cancelling an IPO of its electronics unit.

Asia Pacific

Asian equities were mostly weaker Wednesday as risk appetite suffered from bad Covid news, bad US-China relations, and the prospect of tighter Federal Reserve policy.

Spiking Covid cases in Europe and more lockdowns there renewed worries about the global recovery, paired with news Hong Kong would suspend use of the BioNTech/Pfizer vaccine amid problems with defective packaging. Risk appetite suffered from new sanctions from the Western allies aimed at China over human rights charges, and heated rhetoric from China in response, plus reports casting doubt on China's commitments to buy US goods under past trade deals.

Markets also reacted badly to Dallas Federal Reserve President Robert Kaplan's comment on Tuesday that he is among policymakers expecting the Fed to raise rates as soon as next year. Kaplan is not a voter on Fed policy until 2023.

China's Shanghai index fell 1.3 percent and the CSI300 dropped 1.6 percent, while the Hong Kong Hang Seng index dropped 2.0 percent. Value stocks lagged growth but losses were across the board, led by weakness in materials and industrials. Holding up best though weaker were consumer staples and utilities.

Japan's Nikkei index fell 2.0 percent in response to Covid worries and concern about the global recovery. Energy shares lagged the most as oil prices suffered from Covid effects. Micro-chipmakers were a bright spot, with Tokyo Electron up 5.1 percent on news it would join a government effort to produce better chips.

Australian shares outperformed the rest of Asia/Pacific markets, with the All Ordinaries up 0.4 percent. Health care stocks outperformed, with biotech heavyweight CSL up 1.9 percent after Australian regulator TGA approved it to make the AstraZeneca Covid vaccine. On the downside, information tech and energy stocks lagged.

In economic data, flash PMI data for Japan showed improved but still weak conditions as a recent surge in new Covid-19 cases weighed on activity and sentiment. The manufacturing flash rose slightly to 52.0 while the services flash was little changed and well below breakeven 50 at 46.5.

Looking ahead*

On Thursday in Asia/Pacific, Hong Kong merchandise trade figures are scheduled. In Europe, reports are due on German Gfk Consumer Climate, French Business Climate Indicator, UK CBI Distributive Trades, and Eurozone M3 money supply. In North America, US GDP and US jobless claims figures are on tap.

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