Daily market review

United States

US shares followed global shares lower Thursday as talk builds of widening regulatory actions in China to rein in domestic technology firms that list in overseas markets. The Dow industrials and NASDAQ both fell 0.7 percent.

The market was on the defensive the whole session and included declines for travel and leisure stocks underscoring the uncertain risk posed by Covid's Delta variant: United Airlines down 1.3 percent, Delta Air Lines down 1.1 percent, Carnival down 1.5 percent, and Norwegian Cruise Lines down 1.2 percent.

Initial jobless claims in the US unexpectedly increased in the latest week to a level of 373,000, yet the rise of 2,000 was nevertheless marginal and the trend stable.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose $0.89 to US$74.32 while spot gold slipped US$0.33 to US$1,803.31. The US dollar slipped vs. most major currencies. The US Treasury 30-year bond yield fell 2 basis points to 1.92 percent and the 10-year note yield fell 3 basis points to 1.29 percent.


Losses in Asia together with extending weakness in European economic data swept stocks lower; news of an inflation shift at the European Central Bank appeared to have no immediate impact. France's CAC fell 2.0 percent with the Germany's DAX and the UK's FTSE both down 1.7 percent.

The ECB announced the adoption of a symmetric 2 percent medium-term inflation target, meaning that an undershoot would be seen as equally undesirable as an overshoot. Until now, the central bank had aimed at keeping HICP inflation close to, but just short of, the 2 percent mark. The change suggests that the central bank may now be more willing to tolerate target misses.

UK food-delivery firm Deliveroo fell 2.3 percent despite posting a sharp jump in orders; rival Just Eat Takeaway fell 1.3 percent. German braking systems maker Knorr-Bremse, jumping 7.3 percent, said it has not acquired a stake in Hella, a German auto lighting group that fell 1.4 percent.

In a warning that Swiss growth may not be as firm as expected, the country's unemployment rate was revised sharply higher in May, up 2 tenths to 3.2 percent and though June's rate fell 1 tenth to 3.1 percent, the result was 2 tenths over Econoday's consensus.

Germany's merchandise trade surplus fell €3 billion in May to €12.6 billion with exports up a modest 0.3 percent on the month following an even more modest 0.2 percent rise in the prior month. Yet there were positives including a 3.4 percent rise in imports pointing to strong domestic demand as well as indications that negative Brexit effects, judging by cross-border volumes with the UK, are easing.

Asia Pacific

Concerns that Chinese regulation on technology firms may expand pulled most Asian indexes lower including the Shanghai Composite, down 0.8 percent, and Hong Kong's Hang Seng, down 2.9 percent.

Baidu fell 4.6 percent, Alibaba 4.1 percent, with Dido Global, where regulatory actions sparked the sell-off early in the week, dropping a steep 6.5 percent. Not offsetting the weakness, at least in Thursday's trade, was a signal by China's regulators that reserve requirement ratios in the banking sector may be cut to support borrowers especially small firms.

Next week's quarterly forecasts from the Bank of Japan, according to Reuters, are expected to be marked down due to Covid emergencies that, together with a slow vaccination pace, continue to strike the country. On Thursday, authorities announced a Covid emergenecy in Tokyo that will last through the Olympics. The Nikkei lost 0.6 percent with the Topix down 0.9 percent.

Looking ahead*

Friday's data will be led by Chinese consumer prices as well as producer prices for the month of June. UK data will dominate the calendar in Europe including industrial production, merchandise trade, and monthly GDP; Italian industrial production will also be release. North American data will be headlined by Canada's labour force survey for June and will include the second estimate for monthly US inventories at the wholesale level.

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