Daily market review

United States

Investors returned to growth/technology stocks after recent sustained weakness to lead equities higher Thursday. The Dow Jones industrial average rose 0.6 percent, the S&P 500 gained 1.1 percent, and the NASDAQ advanced by 1.8 percent.

Megacap stocks saw good dip-buying, and tech resumed leadership with gains in chipmakers, including Nvidia, up 3.9 percent, in software, with Microsoft up 1.4 percent, and in hardware, with Apple up 2.1 percent. Communications was another winner: Google up 2.1 percent, Facebook up 1.6 percent, and other media showing strength too with NewsCorp up 4 percent and Netflix up 2.9 percent. Lagging were materials, transports, and energy, as commodities moved lower.

Declines in US Treasury yields after mixed US economic data gave support to risk assets, with jobless claims lower than expected, and the Philadelphia Fed manufacturing report weaker than expected, though still robust.

Among companies in focus, Cisco recovered from losses of more than 6 percent overnight, after warning on supply chain problems, to end up 0.7 percent. Kohl's, the retailer, fell 10 percent as its sales missed expectations. Ralph Lauren, the fashion company, fell 7 percent on disappointing guidance.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.28 to US$65.30 while spot gold rose US$7.56 to US$1,877.68. The US dollar fell vs. major currencies. The US Treasury 30-year bond yield was down 3 basis points at 2.34 percent and the 10-year note yield fell 5 basis points to 1.63 percent.


Equities rebounded Thursday from Wednesday's drop with a boost from company news and strength on Wall Street. The Europe-wide STOXX 600 rose 1.3 percent, the German DAX rose 1.7 percent, the French CAC gained 1.3 percent, and the UK FTSE 100 was up 1.0 percent.

Positive statements from the UK government on its reopening plans provided support amid reports the Covid-19 variant identified in India may not be as concerning as previously believed. Comments from ECB officials downplaying inflation concerns were also positive, while Germany's producer price figures generally matched expectations with another uptick in inflation.

Nordic Semiconductor jumped 9.8% to lead the STOXX 600 after a report that rival STMicroelectronics is considering buying the company. Among other gainers, Royal Mail, the UK postal service, rose 2.6 percent after a strong quarter. Deutsche Telekom rose 2.3 percent after raising its guidance.

Among sectors, technology, financial services and auto and parts outperformed. Basic resources and retail were the main decliners, with retail hurt by disappointing results at Kingfisher, the UK retailer, which declined 0.6 percent, and Dufry, the Swiss-based airport retailer, down 0.9 percent.

In economic news, German producer prices moved in line with the market consensus in April. A 0.8 percent monthly rise was the eighth increase in a row for an annual inflation rate of 5.2 percent, a multi-year high. The PPI has not fallen since May last year.

Asia Pacific

Asia/Pacific markets were mixed Thursday with energy and miners hit by another drop in commodities prices while tech stocks perked up. More weakness on Wall Street Wednesday dampened sentiment in Asia amid fear of Federal Reserve tapering.

Chinese markets ended narrowly mixed after recovering from early weakness tracking declines in US markets. The Shanghai composite eased 0.1 percent and the CSI 300 firmed 0.3 percent with growth outperforming value. Among sectors, energy and materials lagged while financials and consumer staples beat the market. Commodities-linked stocks sold off after Chinese authorities announced plans to curb rising commodities prices. Hong Kong's Hang Seng slipped 0.5 percent on the commodities selloff, with Zijin Mining Group down 5.6 percent.

Japanese equities were flat to higher, with the Nikkei up 0.2 percent and the broader Topix unchanged. Tech stocks, including semiconductors, tracked their US counterparts higher while steel-makers and other cyclicals declined. Japanese trade figures showing strong export growth provided support but the market struggled with worries over Covid lockdowns and Japan's recovery. JGB yields rose along with US Treasury yields in response to the mention of tapering in Federal Open Market Committee meeting minutes.

Australian markets saw most sectors rise with the All Ordinaries up 1.2 percent. Tech stocks led the way higher on good gains in but-now-pay-later stocks while Commonwealth Bank, up 3.2 percent, paced an uptick in banks. Retailers and transports rose while travel lagged. Worst were commodity producers on the selloff in Chinese commodities prices.

In economic news, Japan's trade surplus narrowed from ¥662.2 billion in March to ¥255.3 billion in April, above the consensus forecast for a surplus of ¥145 billion. Export growth accelerated in April, up 38.0 percent on the year after advancing 16.1 percent in March, largely reflecting the impact of severe weakness 12 months earlier. Japanese imports rose 12.8 percent on the year, picking up from an increase of 5.8 percent previously.

Looking ahead*

On Friday in Asia/Pacific, Japanese CPI, Japanese composite PMI flash, Hong Kong CPI, and Australian retail sales reports are due. In Europe, reports are due on UK retail sales, Eurozone consumer confidence flash plus PMI composite flash data from Germany, France, Eurozone, and UK. In North America, Canadian retail sales, US PMI composite flash, and US existing home sales reports are scheduled.

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