Daily market review

United States

Cyclicals plus information technology paced gains Friday, with bank stocks leading after the Federal Reserve announced plans to ease limits on bank stock buybacks and dividends. The Dow Jones industrial average rose 1.4 percent, the S&P 500 gained 1.7 percent, and the NASDAQ was up 1.2 percent.

Rising bond yields gave banks another boost, while energy stocks outperformed as oil prices advanced. Materials rose with an uptick in commodities, and information technology rose too, with Microsoft up 1.8 percent after announcing it will buy Discord, the videogame maker. Semiconductors extended recent gains after Intel said it would manufacture chips for other chip designers.

Lagging were communications services, with Discovery Communications and ViacomCBS both dropping 27 percent to extend a hideous week amid new analyst downgrades and heavy shorting.

Among companies in focus, MagnaChip Semiconductor rose 27 percent after agreeing to be taken private. Telos, the cybersecurity company, rallied 23 percent after blowout quarterly results. Olin, the materials company, rose 6.9 percent after an upgrade at RBC.

In US economic news, personal income fell 7.1 percent in February, in line with Econoday's consensus expectation of a 7.2 percent decline, following a 10.1 percent surge in January tied to federal stimulus. Spending contracted 1.0 percent in February, weaker than the 0.7 percent decrease expected by Econoday's consensus. However, January's estimate was revised up by a full point to 3.4 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$2.70 to US$64.46 while spot gold rose US$5.41 to US$1,732.04. The US dollar rose vs. most major currencies but weakened vs. the Japanese yen. The US Treasury 30-year bond yield rose 3 basis points to 2.38 percent and the 10-year note yield rose 5 basis point to 1.68 percent.


Recovery hopes lifted equities Friday, with miners, energy, and tech stocks leading. The Stoxx 600 pan-European index rose 0.9 percent, the French CAC gained 0.6 percent, the German Dax advanced 0.9 percent, and the UK FTSE 100 was up 1.0 percent.

Investors focused on positive aspects of the Covid vaccine rollout and reopenings even as France, Germany, and Italy imposed new restrictions, and worries over Covid variants persisted.

UK markets outperformed on strength in miners and energy as commodities prices perked up. Technology, travel & leisure, construction, industrials, telecom, retail, and banks also beat the market. Lagging though still higher were health care, media, personal & household, utilities, food & beverage, chemicals, and insurance.

Among companies in the news, Smiths Group, the UK engineering business, jumped 6.9 percent on an earnings beat and better guidance. Oxford Instruments, the UK toolmaker, rose 12 percent after raising its guidance for the fiscal year. AP Moller Maersk, the Danish shipper, rebounded 5.1 percent after dropping earlier in the week on fallout from the disruption as the Suez Canal remains blocked for a fourth day. Air France was flat after news France has reached agreement with the European Commission on terms for state aid to the ailing airline.

In economic data, the March German Ifo survey found a second consecutive healthy improvement in overall business sentiment. The headline climate indicator rose from an upwardly revised 92.7 in February to 96.6, only its second increase since last September but its largest gain since July and its highest level since June 2019.

Asia Pacific

Major Asian equities markets popped up Friday with technology stocks leading the advance in China, Japan, and Korea after a strong close on Wall Street Thursday, and financials and energy stocks leading Australia higher.

China's Shanghai composite index gained 1.6 percent, the broader Chinese CSI300 rose 2.3 percent, and the Hong Kong Hang Seng index gained 1.6 percent. Sectors saw gains across the board with information technology and health care faring best; utilities and energy lagged. More harsh rhetoric between the US and China limited gains even as risk appetite improved.

Japanese shares saw advances across the board though growth beat value, led by banks, transports, transportation equipment, and machinery. The Nikkei 225 Index rose 1.6 percent and the broader Topix was up 1.5 percent. Investors reacted favorably to the faster pace of vaccinations in the US, which is spurring expectations for a more rapid global recovery.

Australian shares tracked other Asian markets higher, with the All Ordinaries index up 0.6 percent, and most sectors advancing. Energy was paced by a recovery in oil prices, with rising commodities prices lifting miners. Big banks and fund managers rose to bolster financials. Health care lagged, with CSL, the big biotech, off 0.9 percent to give back some of its recent gains.

Among companies in focus, Xiaomi, the Chinese smartphone maker, rose 6.3 percent, along with Chinese automaker Great Wall Motor, up 10.4 percent, on news the two firms would build electric vehicles in GWM factories. On the downside, Ryohin Keikaku, the Japanese retailer, fell 3.3 percent after expressing concern about human rights abuses in China's cotton-producing Xinjiang district, which raised the threat of Chinese boycotts.

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