Daily market review

United States

Declining interest rates after a Goldilocks US jobs report helped growth stocks lead equities higher Friday, with the FANMAG complex faring best. The Dow Jones industrial average gained 0.5 percent, the S&P 500 rose 0.8 percent for its seventh straight record high close, and the NASDAQ was up 0.8 percent.

Nonfarm payrolls rose 850,000 in June, above Econoday's consensus of 703,000. The unemployment rate edged up to 5.9 percent from 5.8 percent, above the 5.6 percent expected. Amid reports of worker shortages and reluctance to go back to work, the participation rate remained unchanged at 61.6 percent, just below the expected 61.7 percent.

Markets judged the jobs report would let the Federal Reserve keep rates on hold for a bit longer, even as reopening plays got a boost from a recovering jobs market, including the large share of new payroll jobs in services including leisure and hospitality.

Among sectors, best were information technology, communications services, and consumer discretionary, with Apple up 2.0 percent, Microsoft up 2.2 percent, Alphabet up 1.9 percent, and Amazon up 2.3 percent, among the leaders.

Value stocks were held back by industrials with Boeing down 1.3 percent and airlines weaker. Materials lagged on a selloff in chemical, paper & packaging. Banks lagged as rates slipped, and energy stocks extended their recent losses.

Among companies in focus, Johnson & Johnson rose 1.8 percent after joining Pfizer and Moderna in saying its vaccine protects against the Delta variant. Meanwhile, Virgin Galactic rose 4 percent after announcing it will launch a test flight next week.

Among decliners, Didi Global dropped 5 percent after China announced a cybersecurity review of the rideshare company. Lordstown Motors fell 11 percent on a report it is being investigated by the Department of Justice. IBM slipped 4.6 percent on news its president would leave. Tesla recovered from early losses to edge up 0.1 percent after reporting record deliveries in the second quarter, in line with expectations.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 77 cents to US$76.36 while spot gold rose US$12.75 to US$1,788.34. The US dollar fell vs. most major currencies. The US Treasury 30-year bond yield fell 2 basis points to 2.05 percent and the 10-year note yield was down 2 basis points at 1.44 percent.


Equities ended flat to marginally better Friday with gains in chipmakers and travel stocks offset by weakness in banks. The Europe-wide STOXX 600 and the German DAX both rose 0.3 percent, the French CAC and the UK FTSE 100 were both unchanged.

Dutch chipmaker ASML rose 1.4 percent to lead semiconductors higher on news Micron Technology would use ASML equipment to make its chips. Travel stocks caught a bid on reports that Germany may ease restrictions on travelers from the UK, with RyanAir up 1.3 percent.

Other outperformers included real estate, basic resources, technology, and media. On the downside, banks slipped on news the European Central Bank will step up scrutiny of risky leveraged lending by banks after the Archegos affair. Banks also suffered from sagging market interest rates on Covid concerns. Other laggards included oil & gas, insurance, retail, and food & beverage.

Among companies in the news, Ambu, the Danish medical equipment maker, dropped 9 percent after a revenues miss and lowered guidance. CaixaBank fell 2 percent after the Spanish bank announced big layoffs. On the positive side, ABB rose 1.6 percent after Reuters reported the Swiss technology company may list separately its electric vehicle battery charging unit.

Asia Pacific

Asian equities markets were mixed Friday with Chinese markets markedly lower on a liquidity drain from the People's Bank of China.

The PBOC removed liquidity from the banking system at the close of China's celebration of the Chinese Communist Party's 100th anniversary. The benchmark CSI 300 dropped 2.8 percent and the Shanghai composite fell 2.0 percent. Hong Kong markets tracked mainland Chinese markets lower with the Hang Seng index down 1.8 percent. Tech stocks lagged as markets reacted to the International Monetary Fund's call for the Fed to taper next year.

Japanese stocks edged up with value stocks leading in cautious trading before the US jobs report. The Nikkei firmed 0.3 percent and the broader Topix rose 0.9 percent. The weaker yen gave exporters a boost, including Toyota, which rose 1.3 percent, and Sony, up 3.7 percent. Most sectors rose, led by miners, banks, and transportation equipment. Pharma and retailers lagged.

Korean markets and Taiwan also ended flat with a weak tone as big tech stocks suffered, and risk appetite was hurt by worries about spreading Delta variant cases. The KOSPI was unchanged. Korea and Taiwan both gave up initial gains on a selloff in tech giants, with TSMC, the big chipmaker, ending down 0.8 percent.

Australian markets improved after the government unveiled its four-phase reopening plan, with recovery plays leading, including travel and gaming stocks, and big banks. The All Ordinaries index rose 0.6 percent. Most sectors rose with energy outperforming on rising oil prices ahead of the OPEC+ meeting. Airlines and building materials supported industrials. Lagging were tech and materials, as precious metals sagged.

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