Daily market review

United States

Equities ended nearly unchanged Tuesday after early strength in value/cyclicals faded, while technology helped growth outperform. The Dow Jones industrial average firmed 0.1 percent, the S&P 500 was flat, and the NASDAQ edged up 0.2 percent.

A strong US consumer confidence reading gave cyclicals a morning lift, while homebuilders got a boost from unexpectedly large increases in home price measures to lead consumer discretionary higher. Information technology and consumer discretionary outperformed.

Lagging were consumer staples, communications services, and utilities. Financials were soft as bank stocks were mixed after an array of dividend announcements. Megacap internets depressed communications services, and weakness in tobacco and food stocks hurt consumer staples. Energy gave up early gains to trade lower despite rising oil prices.

Among companies in focus, Lennar, the homebuilder, rose 0.8 percent, and Pulte rallied 2.0 percent. Apple was up 1.2 percent and AMD, the chipmaker, rose 2.8 percent as chipmakers advanced.

In US economic news, in the best reading of the pandemic and well over Econoday's top estimate, consumer confidence rose to 127.3 in June versus an upwardly revised 120.0 in May. Separately, Case-Shiller house price data also beat Econoday's consensus forecasts, at a 1.6 percent monthly gain in April for a 14.9 percent year-over-year gain.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 42 cents to US$75.12 while spot gold declined US$17.36 to US$1,761.76. The US dollar was mostly higher vs. major currencies. The US Treasury 30-year bond yield fell 1 basis point to 2.09 percent and the 10-year note yield was unchanged at 1.47 percent.


European markets ended slightly higher with support from a positive Eurozone economic sentiment report though virus worries limited risk appetite. The Europe-wide STOXX 600 firmed 0.3 percent, the German DAX rose 0.9 percent, the French CAC edged up 0.1 percent, and UK FTSE 100 was up 0.2 percent.

German markets outperformed as Adidas, the sportswear firm, rose 2.1 percent after announcing share buybacks. Among sectors, chemicals rose with AkzoNobel up 0.7 percent after the Dutch paint-maker acquired a Colombian competitor. Autos & parts also outperformed with Renault up 1.1 percent on a report it may invest in Ionity, a VW-backed electric battery charging business. VW rose 1.0 percent.

Real estate and travel/leisure lagged, with virus worries hitting airlines as more countries are expected to limit travel involving the UK. IAG, owner of British Airways, fell 1.4 percent, and Air France declined 1.2 percent.

In economic data, the EU Commission's survey of business and consumer sentiment showed stronger confidence in the euro area in June, with vaccine rollouts and easing of public health restrictions providing support. The headline economic sentiment indicator rose for the fifth consecutive month from 114.5 in May to 117.9 in June, above the consensus forecast for an increase to 116.5. The index is now at a 21-year high and well above pre-pandemic levels.

Asia Pacific

More Covid-19 lockdowns and a selloff in commodities prices weakened most Asian equities markets Tuesday with reopening trades down. China lagged the region.

Fear that another global wave of Covid-19 will derail the world recovery hurt Chinese markets, along with caution headed into the monthly US jobs data due Friday. The benchmark CSI 300 fell 1.2 percent, while the Shanghai composite and Hong Kong's Hang Seng index both dipped 0.9 percent. Among companies in the news, China Gas Holdings fell 5.9 percent on an earnings miss.

Japanese markets slipped on Covid-19 worries as Tokyo and other cities faced possible emergency declarations to cope with the Delta variant. Value/cyclicals dropped while growth stocks held up better. The Nikkei and the broader Topix both fell 0.8 percent. Most sectors declined, with miners lagging, along with metals and other materials stocks. Shipping was the only winner. Notable decliners included Nippon Steel, down 3.8 percent, and Japan Petroleum Exploration, down 3.5 percent.

Dip-buying helped Australian markets recover from a steep morning selloff on new lockdowns imposed to cope with spreading Covid-19. The All Ordinaries index ended down 0.1 percent. Sectors were mixed with energy stocks off with oil prices, and dropping industrial and precious metals prices hurting materials. Mining contractors and infrastructure hurt industrials. Banks held up relatively well. Technology fared best as buy-now-pay-later plays rebounded from Monday's decline.

Looking ahead*

On Wednesday in Asia/Pacific, Korean industrial production, Korean retail sales, Japanese industrial production, Chinese CFLP manufacturing PMI reports are due. In Europe, the following releases are scheduled: UK GDP, French consumer manufactured goods spending, French CPI, French PPI, Swiss KOF leading indicator, German unemployment rate, Italian PPI, Eurozone HICP flash, and Italian PPI. For North America, US ADP employment, Chicago PMI, US pending home sales, Canadian monthly GDP, and Canadian industrial product price reports are on the calendar.

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