Daily market review

United States

A recovery in value/cyclical stocks boosted equities Wednesday, with materials, energy, financials, and industrials leading, and growth/momentum lagging. The Dow Jones industrial average and the S&P 500 both rose 0.9 percent, and the NASDAQ gained 1.2 percent.

The FANMAG complex weakened, with Netflix down 7.4 percent after missing expectations on its subscriber update. Communications services and technology stocks lagged, with internet stocks weaker.

Buying revived across most sectors. Steel and chemicals boosted materials after two days of losses. Energy stocks also found buyers at recent lows, with Chevron up 1.4 percent despite lower oil prices Wednesday. Machinery, airlines, and building materials supported industrials. A recovery in regional banks lifted financials, with Signature Bank up 9 percent after an earnings beat.

Travel stocks bounced back on bargain-hunting too, with American Airlines up 3.1 percent after dropping Tuesday on gloomy results. Norwegian Cruise Line rose 10 percent after an upgrade at Goldman Sachs. Health care was in line, with support from Tenet Health Care, up 4.9 percent after an earnings beat, and UnitedHealth, up 0.5 percent on an analyst upgrade.

In macro news, markets did not react much to news that the Bank of Canada scaled back its asset purchases, as expected, while moving forward the time frame when it anticipates raising interest rates. The S&P/TSX composite rose 0.5 percent on the day.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.50 to US$64.99 while spot gold rose US$16.61 to US$1,794.30. The US dollar declined slightly vs. major currencies. The US Treasury 30-year bond yield was unchanged at 2.26 percent and the 10-year note yield was flat at 1.55 percent.


Better earnings news helped equities rebound Wednesday after days of weakness. The Europe-wide STOXX 600 rose 0.7 percent, the German DAX rose 0.4 percent, the French CAC rose 0.7 percent, and the FTSE-100 was up 0.5 percent.

Dutch chipmaker ASML led tech stocks higher with a gain of 4.8 percent after an earnings beat and improved guidance for the year. Roche, the Swiss pharma, rose 3.0 percent after predicting accelerating demand for its drugs this year. Other winners on earnings beats included Henkel, the German consumer goods maker, up 1.0 percent, and Kering, the French luxury goods conglomerate, up 3.4 percent.

Among other stocks in the news, German luxury clothier Hugo Boss rose 10 percent on reports it may be acquired. On the downside, Juventus, the Italian soccer club, dropped 14 percent after its chairman said the breakaway European Super League would not proceed.

Among sectors, best performers were retail, personal & household goods, technology, health care, telecom, food & beverage, chemicals, oil & gas, and travel & leisure. Laggards included utilities, banks, autos, real estate, and media.

Asia Pacific

Asian equities were mostly lower Wednesday with Japan extending its selloff on rising Covid-19 cases, and as concerns rose over the global recovery.

Reports that Osaka and Tokyo would soon impose wider lockdowns, and speculation about cancellation or restrictions for the Olympic games, hurt Japanese markets, with the Nikkei down 2.0 percent for a second consecutive day and the broader Topix index also down 2.0 percent. Weakness was nearly across the board, with air transportation the only winner. Lagging most was iron & steel, other metals, materials, instruments, and miners.

Chinese markets were mixed, with the Shanghai composite flat and the CSI 300 up 0.3 percent. A poor showing on Wall Street, plus Japan's selloff, and worries about the global recovery weighed on Chinese markets broadly but strength in technology and health care provided support.

Meanwhile, Hong Kong's Hang Seng dropped 1.8 percent, with losses focused in energy, technology, and banking. Anta Sports Products dropped 7.7 percent to lead the losses in Hong Kong after a major investor sold a big stake in the Chinese sports equipment company. On the positive side, chip equipment maker ASM Pacific Technology rose 18 percent on an earnings beat.

Australian shares slipped with the All Ordinaries index down 0.3 percent but equities mostly recovered from the day's early lows. Sectors were mixed with energy stocks tracking oil prices lower and tech stocks off on weakness in Afterpay, down 2.7 percent, and in other buy-now-pay-later stocks. Industrials improved on gains in transport infrastructure stocks, and big-box retailers lifted consumer discretionary while biotechs gave health care a boost.

In economic news, retail sales in Australia rose 1.4 percent on the month in March, well above the consensus forecast for an increase of 0.8 percent. This rebound was mainly driven by the easing in March of some public health restrictions that were put in place in February in response to a rise in Covid-19 cases.

Looking ahead*

On Thursday in Europe, Swiss merchandise trade, French business climate indicator, UK CBI industrial trends, Eurozone EC consumer confidence, and the ECB policy announcement are scheduled. In North America, the following reports are on tap: US jobless claims, Chicago Fed national activity index, US existing home sales, US leading indicators, and the Kansas City Fed manufacturing index.

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