Daily market review

United States

Equities rose Tuesday as growth stocks topped value in a reversal of Monday's trade as investors again bought the dip. The Dow Jones industrial average rose 0.2 percent, the S&P 500 gained 0.5 percent, and the NASDAQ was up 0.8 percent.

Equity indexes rose after Fed Chair Jerome Powell spoke at midafternoon, as caution before his appearance limited activity, but when it passed without much drama, prices continued higher. Earlier, Fed presidents Mary Daly and Loretta Mester largely echoed Powell's stance that policymakers were ready to start talking about tapering but not ready to proceed, and that inflation would retreat toward the Fed's target. Their views contrasted with somewhat more hawkish comments Monday from Fed presidents James Bullard and Robert Kaplan.

Most stock sectors were higher, with consumer discretionary strong as Amazon gained 1.5 percent after a positive update on its Prime Day sales promotion. Energy stocks advanced with integrated oil companies leading. Tech stocks outperformed with help from dip-buying in chipmakers.

On the downside, industrials were depressed by airlines, which slipped after American Airlines said it was reducing its flights to avoid straining its operations as business picks up. American declined 1.5 percent and Delta was off 0.9 percent. Banks weighed on financials. Entertainment and internet stocks were mixed, with Netflix up 2.4 percent and Disney off 0.3 percent. Utilities and real estate lagged the most.

Among companies in the news, Microsoft rose 1.1 percent to touch a $2 trillion market capitalization, joining Apple which rose 1.3 percent to reach $2.24 trillion.

In crypto, bitcoin and other digital currencies recovered from an early steep selloff, as did many crypto-linked stocks, with Coinbase ending down 0.1 percent though Microstrategies fell 5.1 percent.

In US economic news, existing home sales slid another 0.9 percent in May for, however, the smallest decline of the last four months. Likewise, the annual rate at 5.800 million topped Econoday's consensus for 5.715 million.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 96 cents to US$74.89 while spot gold fell US$5.31 to US$1,777.73. The US dollar declined vs. most currencies. The US Treasury 30-year bond yield declined 1 basis point at 2.10 percent and the 10-year note yield declined 3 basis points at 1.47 percent.


Equities ended firmer Tuesday, with UK markets outperforming, on strength in miners, energy, and property stocks, while autos and banks lagged. The Europe-wide STOXX 600 firmed 0.3 percent, the German DAX rose 0.2 percent, the French CAC gained 0.1 percent, and UK FTSE 100 rose 0.4 percent.

Markets noted a Reuters report that ECB officials were ready to accept an inflation overshoot above the bank's 2 percent goal, but policymakers disagreed over how long an overshoot would be allowed.

Among miners, Rio Tinto rose 1.5 percent and BHP gained 1.3 percent, while Royal Dutch Shell gained 2.2 percent.

Among other companies in focus, Kingspan, the Irish building materials company, rose 3.5 percent after raising its guidance. Melrose, the UK manufacturing conglomerate, rose 2.5 percent after announcing a cash payout to shareholders. Total, the French oil supermajor, rose 1.0 percent after renewing its business partnership with French automakers.

On the downside, Rolls Royce declined 0.8 percent on reports it may sell its ITP Aero unit. Aston Martin Lagonda, the UK automaker, fell 1.6 percent as it filed legal action in connection with missing payments for its cars. Deutsche Bank fell 1.9 percent as banks suffered from the ECB's lower for longer interest rate stance.

Asia Pacific

Asia/Pacific equities markets mostly bounced back Tuesday with Japan again leading, after it led the way down Monday.

Japanese markets followed the US market higher with the Nikkei up 3.1 percent and the broader Topix up 3.2 percent. Cyclical stocks led the rebound as many investors judged Monday's selloff, led by cyclicals, as overdone. Gains were across the board, with shipping stocks leading the winners, along with warehousing, rubber products, and construction.

Cyclicals outperformed to lead mainland Chinese markets higher, with the CSI up 0.6 percent and the Shanghai composite up 0.8 percent. Energy led cyclicals higher. Health care was another notable winner, while telecom and consumer discretionary lagged. Meanwhile, Hong Kong lagged, with the Hang Seng down 0.6 percent on weakness in technology and internet stocks, which offset gains in energy. In the tech world, Huobi Technologies dropped 20 percent amid fallout from the rout in cryptocurrencies.

Australian markets tracked US and Asian markets higher with the All Ordinaries index up 1.4 percent as investors bought back many of the same value/cyclical stocks that sold off Monday. Most sectors improved, with energy leading and with a rebound in banks and insurance companies lifting financials. Gaming stocks boosted consumer discretionary. Industrials rose as airlines and mining services advanced. Lagging were health care, technology, and consumer staples. Among health care companies lagging, CSL, the biotech, fell 1.5 percent.

Looking ahead*

On Wednesday in Asia/Pacific, Bank of Japan policy board minutes, the Japanese PMI composite flash and Singapore's CPI are due. In Europe, PMI composite flashes are scheduled from France, Germany, Eurozone, and UK. For North America, Canadian retail sales, US current account, US PMI composite flash, and US new home sales reports are on the calendar.

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