Daily market review

United States

Equities were flat to higher Wednesday with strength in energy and technology stocks offset by weakness elsewhere in a quiet session. The Dow Jones industrial average rose 0.1 percent, the S&P 500 rose 0.2 percent, and the NASDAQ gained 0.1 percent.

Oil prices extended their recent gains to boost energy stocks while tech shares were better bid after being out of favor Tuesday and with US Treasury yields retreating a bit. Among tech stocks, Apple rose 0.6 percent and Nvidia, the chipmaker, rose 3.2 percent after its CEO said he expects a deal to buy rival ARM will get Chinese approval. Paypal gained 1.1 percent as it tracked a rebound in the crpyto/fintech space.

On the downside, materials were dragged down by declines in chemicals and industrial metals, with Dow Inc. down 2.1 percent and Dupont down 0.9 percent. Media and entertainment lagged, with Disney down 1.0 percent. Auto parts and homebuilders were soft in consumer discretionary, with parts seller Magna down 1.2 percent and homebuilder Lennar off 2.2 percent.

Meme stocks were in focus, led by a remarkable rally in AMC Entertainment, up 96 percent, and Gamestop, the original meme stock, up 13 percent, as retail traders teamed up again to push the stocks higher.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 80 cents to US$71.25 while spot gold rose US$9.02 to US$1,908.83. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield declined 1 basis point at 2.28 percent and the 10-year note yield fell 2 basis points to 1.59 percent.


Strength in autos, commodities, and consumer stocks helped equities rise Wednesday in quiet trading. The Europe-wide STOXX 600 rose 0.3 percent, the German DAX firmed 0.2 percent, the French CAC gained 0.5 percent, and the UK FTSE 100 was up 0.4 percent.

Energy stocks were the day's leader, with BP up 2.2 percent and Royal Dutch Shell up 1.7 percent on rising oil prices. A 3.4 percent uptick in Volvo led autos higher after the Swedish automaker said it would distribute cash to shareholders after selling its truck unit. Analyst upgrades for Coca-Cola, up 1.9 percent, and Tate & Lyle, up 1.0 percent, led food & beverage higher.

On the downside, Valneva, the French biotech, fell 7.4 percent as the appeal of the Covid-19 vaccine maker has faded. Ageas, the Belgian insurer, fell 4.1 percent after announcing its strategic plan. Neoen, the alternative energy company, fell 3.3 percent. Wizz Air, the low-cost airline, eased 0.1 percent after a revenues miss and cautious guidance.

In economic data, German retail sales fell by much more than expected in April. A 5.5 percent monthly drop was more than double the market consensus and one of the steepest since the arrival of the coronavirus in March last year. The introduction of the federal emergency brake to contain the virus in the second half of the month will no doubt have had a significant impact.

Asia Pacific

Asia/Pacific equities were mixed Wednesday with Australia outperforming on rising commodities prices and a strong GDP report, while Chinese markets lagged.

Wall Street weakness in growth/technology stocks carried over into Chinese markets with the CSI down 1.0 percent and the Shanghai composite off 0.8 percent. Most sectors declined, with telecom and technology worst, while only energy and utilities saw gains.

Hong Kong's Hang Seng index slipped 0.6 percent, with tech stocks seeing profit-taking after the week's abrupt rally. Alibaba fell back by 1.7 percent and Wuxi Biologics fell 3.1 percent to pace decliners.

Japanese equities improved on the reopening trade on positive global purchasers data and as Japanese vaccinations gather steam. The Nikkei rose 0.5 percent and the broader Topix gained 0.8 percent, with value/cyclicals outperforming. Best were transportation, including airlines and railways, mining, banks, and automakers, with Honda up 4.6 percent and Toyota up 2.2 percent. Lagging most were precision instruments, plus information services and communications.

Strength in miners and energy stocks lifted Australian markets, along with stronger-than-expected GDP figures, with the All Ordinaries up 1.1 percent. Miners and energy producers followed iron ore and oil prices higher, while reopening plays recovered despite as-expected extension of anti-Covid lockdowns in Victoria.

In addition to energy and miners, utilities advanced, with AGL, the utility, up 4 percent on M&A news. Other leaders included travel, infrastructure, banks, and building materials makers. Lagging were biotechs and information technology, especially high-beta buy-now-pay-later stocks.

In economic data, Australia's GDP increased 1.8 percent on the quarter in the three months to March, down from an increase of 3.1 percent in the three months to December but above the consensus forecast for an increase of 1.5 percent. GDP returned to pre-pandemic levels, with year-over year growth rebounding from three consecutive quarterly declines to an increase of 1.1 percent, up from a drop of 1.1 percent in the prior quarter.

Looking ahead*

On Thursday in Asia/Pacific, Hong Kong PMI, Japan PMI composite final, Singapore PMI, Australian goods and services trade, and Chinese PMI composite figures are due for release. In Europe, composite PMI final reports are scheduled from France, Germany, Eurozone, and UK. In North America, US ADP, US jobless claims, US productivity and costs, US PMI composite final, and US ISM services reports are scheduled.

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