Daily market review

United States

Equities were flat to slightly weaker Wednesday in mixed, tentative trading, with earnings in focus, and reaction limited to an as-expected neutral Federal Reserve policy announcement. The Dow Jones industrial average eased 0.5 percent, the S&P 500 was off 0.1 percent, and the NASDAQ eased 0.3 percent.

Equities ticked higher in a relief trade at midafternoon after the Fed left policy on hold and maintained its patient, cautious outlook, but the pop-up faded and the focus returned to earnings, including some disappointments from Boeing, down 2.9 percent, and Amgen, down 7.2 percent after misses.

Tech lagged the most on a decline in Microsoft, down 2.8 percent, as analysts disliked aspects of the software giant's results. Texas Instruments fell 4.4 percent after reporting demand for its chips is so strong it is struggling to keep up. Apple declined 0.6 percent as the market awaited its earnings after the close.

On the positive side, Google rose 3.2 percent after a huge earnings beat, to lead communications stocks higher, Energy was another winner as oil prices advanced, led by Chevron, the supermajor, up 2.5 percent. Consumer discretionary outperformed on a rise in Amazon, up 1.2 percent, and gains in travel & leisure stocks. Credit cards got a lift from Capital One, up 4 percent.

In macro news, markets are watching President Biden's $1.8 trillion American Families Plan to be unveiled Wednesday night, including proposed tax increases the on wealthy. Axios reported the Biden administration has held constructive talks with Republicans on infrastructure investment plans.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 38 cents to US$67.09 while spot gold rose US$5.24 to US$1,781.54. The US dollar declined vs. most major currencies. The US Treasury 30-year bond yield declined 1 basis point to 2.29 percent and the 10-year note yield was flat at 1.62 percent.


European equities were flat to higher Wednesday with focus on earnings reports. The Europe-wide STOXX 600 was flat, both the German DAX and FTSE-100 rose 0.3 percent, while the French CAC rose 0.5 percent.

Among sectors, banks and oil & gas led outperformers, with banks up on earnings and energy paced by rising oil prices. Other outperformers included insurance, media, retail, and food & beverage. Lagging were industrials, utilities, technology, travel & leisure, real estate, and personal & household goods.

Among companies in focus, Lloyds Banking Group rose 3.5 percent, Deutsche Bank jumped 11 percent, and Delivery Hero, the food delivery service, rose 8.5 percent on earnings beats. On the downside, Stagecoach Group, the bus company, fell 7.6 percent after a big insider sale and analyst downgrade. J Sainsbury, the supermarket, fell 2 percent on an earnings miss.

In economic news, the April German GfK survey was surprisingly soft. The provisional consumer climate index for this month was revised a tick firmer to minus 6.1 but the expectation for May is a decline to minus 8.8, some 5 points short of the market consensus and the first fall since January.

Asia Pacific

Major Asian equities markets were mixed but mostly firmer Wednesday with activity limited by caution ahead of the Federal Reserve's policy announcement and sentiment depressed by the tragic pandemic situation in India.

Among Chinese markets, the Shanghai composite rose 0.4 percent, the CSI 300 gained 0.6 percent, and Hong Kong's Hang Seng index was up 0.5 percent. Growth beat value but both gained. Most sectors rose, with health care and utilities leading while financials and consumer staples lagged.

Japanese markets edged up, with the Nikkei 225 up 0.2 percent and the wider Topix firmed 0.3 percent, with most sectors higher. Best performers included transportation equipment, securities firms, technology, banks, and miners, while laggards included paper, iron and steel, and sea and land transportation services. Among companies in focus, Fanuc, the robotics company, rose 2 percent on an earnings beat.

Australia recovered from initial weakness to end slightly higher with the All Ordinaries index up 0.3 percent. Banks led the winners: Westpac rose 1.2 percent and National Australia Bank 1.1 percent, both getting a boost from lower-than-expected Australian inflation figures that eased concerns about near-term tightening from the Reserve Bank of Australia.

On the inflation figures, Australia's headline consumer price index rose 1.1 percent on the year in the three months to March, picking up from an increase of 0.9 percent in the three months to December but falling short of the consensus forecast of 1.4 percent and still well below the Reserve Bank of Australia's target range of 2.0 percent to 3.0 percent.

India's markets continued to rebound as attention returned to positive earnings reports amid hopes for a faster rollout of vaccines to curb the raging pandemic. The Sensex rose 1.6 percent and the Nifty gained 1.4 percent, paced by banks and auto shares.

Looking ahead*

Due Thursday in Asia-Pacific, New Zealand merchandise trade. In Europe, the German unemployment rate, Eurozone M3, Eurozone EC economic sentiment, Italian PPI, and German CPI are scheduled. In the US, reports are due on GDP, jobless claims, and pending home sales.

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