Daily market review

United States

Gains in retail and reopening plays gave equities a modest lift Wednesday in quiet trading. The Dow Jones industrial average was flat, the S&P 500 firmed 0.2 percent, and the NASDAQ was up 0.6 percent.

Most sectors were higher, with consumer discretionary faring best on upbeat quarterly results. Homebuilders remained strong, with KB Homes up 2.6 percent to extend its recent rally. Among retailers, Nike gained 1.9 percent, Dick's Sporting Goods rose 17 percent, and Abercrombie & Fitch rose 1.9 percent on positive trading updates.

Communications services outperformed too on strength in media, including Discovery Communications, up 3.8 percent. Energy bounced back to recover some of the week's losses. Banks mostly improved.

On the downside, materials lagged on weakness in chemicals and paper. Technology underperformed as chipmakers retreated. Health care lagged the most on a selloff in biotech and medical technology stocks, including Amgen, down 1.4 percent. Consumer staples lagged on news Amazon, up 0.2 percent, may move into the physical pharmacy business.

Among companies in focus, Ford jumped 8.6 percent after positive comments on its electrical vehicle plans. Exxon Mobil rose 1.2 percent as oil prices rose.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 35 cents to US$68.82 while spot gold declined US$3.19 to US$1,896.32. The US dollar rose vs. most major currencies. The US Treasury 30-year bond yield rose 1 basis point at 2.27 percent and the 10-year note yield rose 2 basis points to 1.58 percent.


A mixed sector performance left equities flat Wednesday, with weakness in banks and other financials offset by a better showing for travel & leisure and retail stocks. The Europe-wide STOXX 600, the French CAC, and the UK FTSE 100 were all flat while the German DAX eased 0.1 percent.

Banks suffered as European bond yields continued to decline as markets price out expectations for near-term tapering asset purchases from the European Central Bank. Swedish bank stocks in particular were hurt after the Riksbank said banks may have to boost reserves if the recovery continues. Swedbank fell 2.9 percent.

The reopening trade lifted Intercontinental Hotels by 1.1 percent, Lindblad, the tour business, by 2.0 percent, and Whitbread, the UK hospitality business, by 1.6 percent. British retailer Marks & Spencer rose 7.7 percent on upbeat earnings.

On the downside, Deutsche Bank fell 1.0 percent and BNP Paribas fell 1.4 percent De La Rue, the UK manufacturer, fell 4.0 percent, and British Land, the UK real estate investment trust, fell 3.7 percent on weak trading updates.

Asia Pacific

Calming words from Federal Reserve officials on the inflation outlook and hopes for progress against Covid-19 helped most Asia/Pacific markets edge up Wednesday, though Australia weakened on a renewed selloff in commodities prices.

Chinese markets firmed as concerns over inflation diminished, partly in response to government steps to rein in rising commodities prices, including stronger price controls for iron, copper, and other major commodities. The Shanghai composite rose 0.3 percent and the CSI 300 was flat, with value stocks outpacing growth, and reports heavy flows into state-owned equity ETFs. Among sectors, financials and materials outperformed while technology and utilities lagged.

Taiwan's Taiex tracked Chinese markets with a gain of 0.3 percent while Hong Kong's Hang Seng index outperformed with a gain of 0.9 percent, led by real estate and technology. Among Hong Kong stocks in focus, China Evergrande Group, the property developer, gained 3.2 percent; Great Wall Motor Company rose 5.3 percent after rolling out its stock option plan; and Xiaomi, the mobile phone maker, rose 1.4 percent after a US court removed the US investment ban on its shares.

Japanese equities were bolstered by signs that vaccines are rolling out faster, and lower US bond yields, but caution over likely extensions of lockdowns limited the market's strength. The Nikkei firmed by 0.3 percent and the broader Topix was unchanged. Air and land transportation stocks got a boost from vaccine optimism. Lagging were banks, iron & steel, paper, and utilities.

A resumption in the commodity price selloff on Chinese regulatory threats dampened Australian markets with the All Ordinaries down 0.3 percent. Reports that Victoria authorities are considering tightening restrictions to counter a Covid outbreak also weighed on the market. Sectors were mixed with tech, telecom, and utilities outperforming, and miners and health care lagging.

Looking ahead*

On Thursday in Asia/Pacific, the Bank of Korea will issue its policy announcement, plus reports on Australian capital expenditures, Hong Kong merchandise trade, and Chinese industrial profits are due for release. In Europe, the following releases are scheduled: German Gfk consumer climate, Swiss merchandise trade, Swiss employment, and Italian business and consumer confidence. In North America, US durable goods, US jobless claims, US pending home sales, Kansas City Fed manufacturing, and US GDP figures are scheduled.

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