Daily market review

United States

News of a deal on US infrastructure spending lifted equities Thursday with growth stocks starting the day stronger and value stocks catching up. The Dow Jones industrial average rose 1.0 percent, the S&P 500 rose 0.6 percent, and the NASDAQ gained 0.7 percent.

The Biden administration and a bipartisan group of 10 senators announced a deal on $597 billion in infrastructure spending including roads, bridges, water infrastructure, and broadband. The deal, which is a fraction of Biden's original proposal, must still be approved in Congress, including the Senate, where it may face a filibuster. Many Democratic investment priorities were omitted and may be considered in a separate measure later.

Among sectors, best performers included banks and life insurers, despite a muted response to the infrastructure deal from long-term bond yields, with the US 10-year holding below 1.50 percent. Machinery and materials paced industrials. Among industrials, Boeing rose 2.9 percent, Honeywell gained 1.4 percent, and Caterpillar rose 2.6 percent.

Media stocks boosted communications services. Health care rose with help from Eli Lilly, up 7.3 percent on news of FDA go-ahead for its Alzheimer's treatment. Energy, materials, and tech stocks matched the market with chipmakers leading tech.

Lagging were consumer staples and consumer discretionary with Amazon down 1.6 percent and homebuilders having a bad day, led lower by KB Home, down 6.7 percent, after a revenues miss. Defensive sectors fared worst, with utilities and real estate off.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 20 cents to US$75.52 while spot gold fell US$3.01 to US$1,774.44. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield fell 1 basis point at 2.10 percent and the 10-year note yield was unchanged at 1.49 percent.


Reopening plays helped equities rise Thursday with help from upbeat economic data. The Europe-wide STOXX 600 and the German DAX both rose 0.9 percent, the French CAC gained 1.2 percent, and UK FTSE 100 gained 0.5 percent.

A big jump in the German Ifo business confidence reading underpinned risk appetite and hopes for recovery -- at the same time that investors see central banks remaining in accommodative mode. The Bank of England, as expected, left its policy settings unchanged and said there had been no discussion of tapering its asset purchases at Thursday's meeting. Earlier this week, comments from European Central Bank officials suggested the ECB is not ready to consider pulling back from its accommodative stance either.

Among sectors, travel & leisure topped winners on easing of travel restrictions for vaccinated travelers in most of Europe, despite concerns about UK travelers and the Delta variant. Banks rose on the reopening trade. Gaming names rose on news that 888 Holdings, the UK-listed gambling website provider, would work with Sports Illustrated and others to provide online sports betting.

Among companies in focus, Tecan, the Swiss laboratory equipment maker, rose 11 percent on news it will acquire Paramit, a US competitor. Fiskars, the Finnish tool maker, rose 4.3 percent after raising its guidance. ABN Amro, the Dutch bank, rose 1.3 percent on news it will unload a portfolio of troubled energy loans to US vulture funds.

Asia Pacific

Equity indexes traded mostly flat with sectors mixed Thursday as traders waited for news to alter the investment picture.

China was mixed with CSI up 0.2 percent and the Shanghai composite flat. Value topped growth with industrials and consumer staples leading while health care lagged, along with consumer discretionary. Risk appetite was hurt by news that the Biden administration was banning imports of Chinese solar power equipment provider Hoshine Silicon, which fell 7.2 percent.

Gains in energy and tech shares helped Hong Kong firm, with the Hang Seng up 0.2 percent. Tech stocks led Korea and Taiwan slightly higher with the KOSPI up 0.3 percent and the Taiex up 0.4 percent.

Japanese markets were steady to lower with the Nikkei flat and the broader Topix down 0.1 percent. Growth slipped while value sectors were stable. Sectors were split with mining outperforming, followed by metals, communications services, banks, transportation equipment, and precision instruments. Lagging were airlines, rail, and real estate, transportation, real estate and other finance.

Australian markets weakened. The All Ordinaries index was off 0.2 percent with investors continuing to shift into tech and growth stocks while cyclicals sold off. Risk appetite was undercut by the worsening virus situation in New South Wales. Health care lagged as CSL, the biotech, fell 2.6 percent on news the government would stop using the AstraZeneca vaccine. Energy, financials, and industrials lagged while buy-now-pay-later stocks helped tech outperform.

Looking ahead*

On Friday in Asia/Pacific, New Zealand merchandise trade and Singapore industrial production reports are due. In Europe, the following releases are scheduled: German Gfk consumer climate, Eurozone M3 money supply, Italian business and consumer confidence, and UK CBI distributive trade. For North America, US personal income and outlays and US consumer sentiment reports are on the calendar.

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