Daily market review

United States

Another surprisingly strong US economic reading powered equities Monday while bond yields stayed relatively flat. The Dow Jones industrial average rose 1.1 percent, the S&P 500 gained 1.4 percent, and the NASDAQ rallied 1.7 percent.

News that the ISM services purchasing managers index soared to 63.7 in March following Friday's blowout 916,000 rise in nonfarm payrolls underscored expectations for a robust recovery, with an accompanying rebound in corporate profits.

Growth stocks led value/cyclicals with rallies in Google, up 4.2 percent, Facebook, up 3.4 percent, Apple, up 2.4 percent, and Microsoft, up 2.8 percent. And gains were nearly across the board, with energy and real estate the only significant laggards.

Among companies in the news, Google advanced on a favorable Supreme Court ruling in its copyright dispute with Oracle. Tesla popped up 4.4 percent on better-than-expected production figures that led consumer discretionary shares higher, including Amazon, up 2.1 percent.

Reopening plays fared well too, with Norwegian Cruise Lines up 7.2 percent after submitting its plan to resume cruises in July. JetBlue rose 3.9 percent after an upgrade at Raymond James. MGM Resorts was up 5 percent. GM was another winner, up 5.6 percent after an upgrade at Wells Fargo. On the downside, energy stocks suffered from a selloff in oil prices and profit-taking after outperforming through the first quarter.

In US economic data, momentum for ISM's services sample jolted forward in March to a composite score of 63.7 that far exceeded Econoday's consensus range. In an important plus that underscores last week's 916,000 surge in nonfarm payrolls, the employment index for this report jumped 4.5 points to 57.2 which is unusually strong for this reading and which tops January's 55.2 as the best month of the pandemic.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$2.67 to US$62.19 while spot gold eased 77 cents to US$1,728.10. The US dollar dropped vs. most major currencies. The US Treasury 30-year bond yield rose 1 basis point to 2.36 percent and the 10-year note yield declined 1 basis point to 1.71 percent.


Equities markets were on holiday Monday.

Asia Pacific

Strong US jobs data boosted risk appetite to lift most major Asian equities Monday, though trading was limited by holidays in Greater China and Australia. On the negative side were rising Covid-19 cases in China, India, Japan, and Korea, and concerns about renewed lockdowns. Indian markets lagged on pandemic worries.

Japanese markets rose at the start of the week on the strong US jobs report released on Friday, with the Nikkei 225 index up 0.8 percent and the broader Topix ahead by 0.6 percent. Japanese financial firms and trading houses outperformed on news of a yen-bond offering from Berkshire Hathaway; last year, the giant holding company took stakes in Japan's top five trading houses, the big importers/suppliers that handle much of Japan's trade, from grain to textiles.

South Korean shares edged up as the strong US jobs report supported the recovery narrative, with big tech firms mostly higher. The KOSPI firmed 0.3 percent, with support from SK Hynix, the chipmaker, up 1.4 percent.

Indian markets retreated as rising Covid case counts renewed worries about new restrictions and economic fallout. The NSE Nifty fell 1.5 percent and the Sensex declined 1.7 percent, with banks leading the selloff. Icici Bank dropped 3.9 percent to lead decliners.

Chinese markets were shut for holidays. Investors took note of a Financial Times report that the People's Bank of China has asked banks to limit lending in a bid to cool China's bubbling property market. The FT also reported a high number of Chinese tech firms have postponed IPOs as companies face increased regulatory scrutiny.

Among Asian companies in focus, Hyosung, the Korean manufacturer, rose 1.3 percent on news of a big contract to supply carbon fibers for Hanwha, which rose 0.5 percent. Adastria, the Japanese retailer, rose 3.2 percent on strong March store sales. On the downside, LG Electronics, the Korean manufacturer, fell 2.5 percent on news it will exit the smartphone business.

Looking ahead*

On Tuesday in Asia/Pacific, Japanese household spending, Singapore PMI, and the Chinese PMI composite are scheduled. In Europe, the Eurozone unemployment report will be released while in North America, the US JOLTS job openings report is due.

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