Daily market review

United States

Equity indexes ended flat to weaker Wednesday after a late selloff pushed major indexes to the day's lows. Sectors were mixed, with energy and consumer discretionary stocks providing support while technology lagged and interest rates firmed. The Dow Jones industrial average eased 0.2 percent, the S&P 500 slipped 0.1 percent, and the NASDAQ firmed 0.1 percent.

Equities were depressed at midday after Atlanta Fed President Raphael Bostic, who is typically considered a centrist, said he had moved forward his forecast for a rate rise to 2022 and that the time is nearing for the Fed to taper its asset purchases. Bostic and Fed Governor Susan Bowman both said temporary inflation increases may take longer than anticipated to fade.

Energy paced the winners after crude oil prices rose on supportive US inventory figures. Retailers and apparel stocks lifted consumer discretionary, along with a few automakers, including Tesla, up 5.2 percent, and Ford, up 3.4 percent. Banks and consumer finance companies supported financials, and industrial and precious metals lifted materials.

Among laggards, tech underperformed on weakness in software and tech services, though chipmakers rose. Grocers dragged down consumer staples and pharma weakness hurt health care. Utilities lagged the most. A poor showing in megacaps, including Apple, down 0.2 percent, Microsoft, down 0.1 percent, and Amazon, down 0.1 percent, weighed on the market.

Among companies in the news, Fannie Mae plunged 32 percent and Freddie Mac dropped 35 percent after the Supreme Court said President Biden can remove the head of the Federal Housing Finance Agency, which supervises the two housing agencies. Moderna fell 4.2 percent after the Center for Disease Control linked mRNA Covid vaccines to a rare heart disorder. On the positive side, Shake Shack rose 2.8 percent after announcing it would expand in China. Huntington Bancshares rose 1.5 percent after an upgrade at Raymond James.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 43 cents to US$75.32 while spot gold fell US$2.25 to US$1,777.45. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield rose 2 basis points at 2.11 percent and the 10-year note yield gained 2 basis points at 1.49 percent.


Equities edged down Wednesday after the market could not sustain its recent advance, but strength in commodities stocks limited the decline. The Europe-wide STOXX 600 declined 0.7 percent, the German DAX fell 1.2 percent, the French CAC was off 0.9 percent, and UK FTSE 100 eased 0.2 percent.

Among sectors, worst were utilities, retail, telecom, chemicals, travel & leisure, personal & household goods, construction, and autos. Holding up best were basic resources, oil & gas, banks, food & beverage, and real estate. Rising oil and other commodities prices underpinned basic resources and energy stocks.

French luxury goods retailer Kering fell 3.2 percent to depress retail after a downgrade at HSBC. Oil & gas got a boost from Royal Dutch Shell, up 1.6 percent, after an upgrade at Societe Generale. Among miners, Glencore gained 0.9 percent after its CEO said Chinese efforts to reduce commodities prices would fail. Anglo American, the miner, rose 1.4 percent after its update on De Beers diamond sales.

In economic news, Eurozone business activity improved slightly faster than expected in June. A 59.2 flash composite was up from 57.1 in May and 0.4 points above the market consensus. It also signaled the fastest growth in 15 years. As anticipated, June's headline gain was due to services where the flash rose from May's 55.2 to 58.0, a 41-month peak. At 63.1, manufacturing was unchanged from the previous period's final print.

Asia Pacific

Tuesday's Soothing words from Federal Reserve officials and a strong US showing for growth stocks helped most Asia/Pacific equities edge up Wednesday with Chinese markets leading while Japan and Australia lagged.

Fed Chair Jerome Powell's comments Tuesday suggested the Fed remains in no rush to remove its policy accommodation as he downplayed inflation concerns and said policy-makers are focused on ensuring a broad and inclusive economic recovery. At the same time, Powell and other Fed officials managed to assure investors they are attentive to inflation and committed to ensuring it does not get out of hand, helping to push down long-term interest rates and giving a boost to tech and other growth stocks.

Tech stocks rallied to help Hong Kong outperform, with the Hang Seng up 1.8 percent Wednesday. Energy, financials, and property stocks also showed strong gains. Mainland Chinese markets saw less dramatic gains, with the CSI up 0.5 percent and the Shanghai composite up 0.3 percent. In a reversal from the US trend, value stocks topped growth, with technology and materials stocks outperforming. Consumer staples was the only sector showing declines.

Tech stocks led Korea and Taiwan higher with the KOSPI up 0.4 percent and the Taiex up 1.5 percent. Taiwan Semiconductor Manufacturing, the chip giant, rose 2.9 percent after falling about 4 percent on the first two days of the week. Naver, the Korean technology conglomerate, jumped 8.3 percent after dropping plans to bid for eBay Korea.

Japanese markets drifted lower with the Nikkei unchanged and the broader Topix down 0.5 percent. Most sectors declined, with banking, iron & steel, real estate and utilities lagging the most while mining and precision instruments held up best.

Australian markets slipped on negative Covid news with the All Ordinaries index off 0.5 percent. Risk appetite was hit after Sydney imposed new limited restrictions in response to an uptick in Covid cases, and other states and cities imposed travel restrictions. Authorities appear to be considering additional restrictions if cases continue to climb. Commonwealth Bank of Australia said the Reserve Bank of Australia is likely to start raising interest rates late in 2022 and continue in 2023. Westpac has said it expects rate increases to start in 2023.

Most sectors slipped, with health care lagging, along with industrials, and energy, while bank stocks continued to retreat. Rising iron ore prices helped miners outperform, along with technology, with support from buy-now-pay-later stocks.

Looking ahead*

On Thursday in Asia/Pacific, no major reports are due. In Europe, the Bank of England's policy announcement and minutes are due, plus the French business climate indicator and German Ifo survey reports. For North America, durable goods orders, GDP, international trade, jobless claims, wholesale inventories, and retail inventories reports are on the calendar.

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