Daily market review

United States

Growth and technology shares improved Monday while value/cyclicals mostly pulled back. The Dow Jones industrial average eased 0.3 percent, the S&P 500 firmed 0.2 percent, and the NASDAQ gained 0.7 percent.

The S&P 500 retreated from Friday's record close as investors awaited Wednesday's policy statements from the Federal Reserve. On the positive side, the heavily-weighted FANMAG complex traded higher, with Apple up 2.5 percent and Netflix up 2.3 percent.

Among sectors, materials lagged the most on weakness in industrial metals, followed by financials as banks extended last week's selloff. Energy stocks faded after an uptick during European hours. Among financials, JP Morgan declined 1.7 percent after CEO Jamie Dimon made a negative comment about trading revenues and net interest income. Consumer staples suffered, with drug stores and food companies weaker. Health care also lagged with hospitals and managed care down.

Among tech shares, Adobe was a notable winner, up 2.9 percent, after positive analyst comments ahead of its earnings due Thursday. Separately, Novovax, the biotech, declined 0.9 percent despite announcing strong trial results for its Covid-19 vaccine comparable to Pfizer and Moderna.

Cryptocurrencies rebounded after a positive mention from Elon Musk, another factor underpinning tech-related stocks.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 39 cents to US$72.98 while spot gold fell US$10.82 to US$1,866.07. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield rose 4 basis points at 2.18 percent and the 10-year note yield rose 4 basis points to 1.50 percent.


Energy stocks helped equities edge up Monday on the recovery trade. The Europe-wide STOXX 600, the French CAC, and the UK FTSE 100 all firmed 0.2 percent while the German DAX eased 0.1 percent.

Oil prices continued their recent ascent as markets focus on recovering demand, with US passenger and air traffic rebounding and the International Energy Agency reporting tightening global supplies.

In addition to oil, other better performing sectors included utilities, technology, real estate, retail, media, banks, and personal & household goods. Lagging were autos & parts, travel & leisure, basic resources, chemicals, and food & beverages. Travel stocks suffered from news the UK is delaying lifting travel restrictions on concern over Covid-19 case counts linked to the Delta variant. Autos suffered from concerns over chip shortages depressing production.

Among companies in focus, Royal Dutch Shell rose 2.7 percent on news it may sell some of its holdings in Texas. On the downside, Philips, the Dutch manufacturer, lost 4.1 percent on news it is recalling certain consumer devices. German automaker Daimler declined 1.5 percent on chip worries to weaken the Dax.

In economic news, Eurozone industrial production was stronger than expected in April. Following an upwardly revised 0.4 percent monthly gain in March, output (ex-construction) rose 0.8 percent, double the market consensus and its third increase so far in 2021.

Asia Pacific

Asia/Pacific equities were mixed Monday with Japan outperforming while markets were closed in Australia, China, Hong Kong and Taiwan.

Better Covid-19 news helped Japanese equities rise with the Nikkei up 0.7 percent and the broader Topix up 0.3 percent. Cyclicals led the way higher as Japan's vaccination effort is advancing and reports that the government is considering easing restrictions in Tokyo and other cities. Among the day's best performers were Toshiba, up 2.7 percent after reshuffling its board after a governance scandal, while Nippon Yusen, the shipping firm, rose 2.3 percent and Yokohama Rubber gained 2.9 percent.

Korea's KOSPI edged up 0.1 percent in quiet, mixed trading as investors awaited the Federal Reserve policy announcement on Wednesday and any clues on the Fed's thinking about tapering asset purchases. Concerns about chip shortages hurt tech and auto heavyweights with Hyundai Motor down 0.2 percent, and Samsung Electronics down 0.6 percent. On the plus side, Naver, the e-commerce leader, rose 3.9 percent.

Indian stocks were flat to higher, with the BSE Sensex up 0.2 percent and the Nifty up 0.1 percent, with support from Reliance Industries, the industrial conglomerate, up 1.5 percent, and Infosys, the software giant, up 1.0 percent. On the downside, Adani Ports fell 8.5 percent after a regulator froze accounts of a major shareholder.

Looking ahead*

On Tuesday in Asia/Pacific, Australian RBA minutes and the Australian residential property price report is due. In Europe, German CPI, UK labour market, French CPI, Italian CPI, and Eurozone merchandise trade reports are due. In North America, Canadian housing starts, US PPI-FD, US retail sales, US Empire State manufacturing, US industrial production, US business inventories, US housing market index, and US Treasury TICS reports are scheduled.

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