Daily market review

United States

Investors bought the dip Friday after Thursday's reflexive move down on reports the Biden administration would push for higher capital gains taxes on the wealthy. The Dow Jones industrial average rose 0.7 percent, the S&P 500 gained 1.1 percent, and the NASDAQ gained 1.4 percent.

Stock sectors recovered nearly across the board as the market calmed down about the prospective tax rise, as many analysts said actual tax increases are likely to be smaller than the administration's initial proposal, and that wealthy investors would find ways to avoid paying. Markets also reacted favorably to more US economic data suggesting the rebound is gathering momentum.

Financials led the way higher after some upbeat earnings and M&A news from regional banks, including Meridian Bancorp, which surged by 23 percent after agreeing to be acquired by Independent Bank Corp., which rose 3 percent. Materials advanced on gains in industrial metals. Energy stocks rose with crude oil prices. Tech stocks popped up in spite of an earnings disappointment at Intel, down 5.3 percent. Airlines led industrials higher on dip-buying. Communications services lagged as Netflix flagged by 0.6 percent. Health care and defensive stocks lagged, with consumer staples hurt by an earnings disappointment at paper goods leader Kimberly Clark, down 5.8 percent.

In US macro news, higher mortgage rates in March did not hold down new home sales much, as sales surged a monthly 20.7 percent to a 1.021 million annual rate to far exceed Econoday's consensus range. Separately, monthly PMI flash reports all posted records and all exceeded Econoday's consensus estimates: April's composite up 2.5 points to 62.2, manufacturing up 2.5 points to 60.6, and services up 2.7 points to 63.1.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 55 cents to US$66.09 while spot gold fell US$7.22 to US$1,776.17. The US dollar fell vs. most major currencies. The US Treasury 30-year bond yield rose 1 basis point to 2.24 percent and the 10-year note yield was up 1 basis point at 1.56 percent.

Europe

Pandemic worries and Thursday's weakness on Wall Street dampened sentiment but major indexes recovered from early lows to end marginally weaker Friday. The Europe-wide STOXX 600 eased 0.1 percent, the German DAX declined 0.3 percent, the French CAC declined 0.2 percent, and the FTSE-100 was flat.

More positive earnings reports and better European economic data provided support, including strong UK retail sales results and European PMI composite flash figures for April. On the negative side, rising global coronavirus cases, especially in Asia, underlined worries that the recovery will falter.

In economic news, UK retail sales were robust in March. Boosted by a partial lifting of the third nationwide lockdown, sales jumped by 5.4 percent on the month, well above the market consensus and their best performance since June last year. Separately, purchasing managers index data showed Eurozone business activity had a surprisingly good April. At 53.7, the flash PMI composite output index was nearly a full point above the market consensus and up from March's final 53.2. April's unexpected improvement reflected improved performances by both manufacturing and services.

Among stock sectors, best performers were basic resources, travel & leisure, technology, media, industrials,, construction, and banks. Lagging were defensive sectors including real estate, health care, personal & household goods, utilities, telecom, plus oil & gas.

Among stocks in the news, Swedish automaker Saab rose 6.4 percent on an earnings beat. Ipsos, the French market research firm, rose 5.9 percent after announcing a revenues beat, and raising its guidance. Vivendi, the French media group, rose 2.8 percent after reporting better-than-expected organic growth.

Asia Pacific

Major Asian equities markets mostly edged up Friday though Japan ended lower on new anti-virus lockdowns, and some carry-over from Thursday's selloff on Wall Street over tax increase fears.

Focus on accelerating Covid-19 cases across much of Asia gave Chinese health care stocks a boost, and clean energy stocks rallied after Chinese President Xi Jinping's latest pledge to make China carbon neutral. The Shanghai composite rose 0.3 percent and the CSI 300 advanced 0.9 percent.

Hong Kong's Hang Seng index outperformed with a gain of 1.1 percent Friday, paced by gains in health care and tech stocks, as inflows from the mainland perked up. Among companies in the news, Ping An Insurance Group, the insurance company, which rose 1 percent after an earnings beat.

Australia ended slightly higher with the All Ordinaries index up 0.1 percent. Sectors were mixed with retailers very weak, along with gold miners and airlines, while financials outperformed as banks, fund managers and insurers outperformed.

Among companies in focus, Nidec, the Japanese electric motor maker, fell 5.1 percent after its CEO and founder stepped down following a downgrade to its profits guidance for the year. Xinyi Solar, the Chinese solar power engineering company, rose 8.6 percent after China's green pledge.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

Looking forward