Daily market review

United States

Stocks rebounded as a rise in bond yields gave bank stocks a lift; the Dow industrials rose 1.3 percent and the Nasdaq 1.0 percent, more than reversing yesterday's 0.7 percent losses for each.

Bond yields had moved noticeably lower through most the week but moved higher on Friday, in turn giving a lift to banking stocks: Bank of America up 3.3 percent, Citigroup up 2.6 percent, Goldman Sachs up 3.6 percent, JP Morgan Chase up 2.9 percent, and Wells Fargo up 3.8 percent. Banks will begin posting their second-quarter results next week.

In specific company news, the Food and Drug Administration is calling for a federal investigation into the accelerated approval of Biogen's Alzheimer's drug Aduhelm. Last month's approval met objections within the FDA. Biogen fell 2.9 percent.

Citing lack of competition as a factor behind low wage growth, the White House announced a broad executive initiative aimed at limiting monopolies across US industries. There were no major US economic releases on Friday, but there was in Canada where employment soared past expectations in June, with 230,700 jobs added over the month. The S&P/TSX composite rose 1.0 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose $1.45 to US$75.57 while spot gold slipped US$5.53 to US$1,808.36. The US dollar fell vs. most major currencies. The US Treasury 30-year bond yield rose 7 basis points to 1.99 percent as did the 10-year note yield to 1.36 percent.


Reversing much of Thursday's steep losses, European shares rallied Friday despite a batch of mixed-to-soft economic data. Germany's DAX and Italy's FTSE MIB both rose 0.7 percent while the FTSE rose 1.3 percent.

Banks posting gains on rising yields included Deutsche Bank up 4.6 percent, ING up 4.3 percent, Santander up 3.6 percent, and UBS up 2.1 percent

Expansion for UK GDP was surprisingly slow in May, up 0.8 percent versus expectations for 1.6 percent and the smallest increase since GDP last contracted in January. Yet trade data for the UK were positive, showing a narrowing in the goods deficit from £10.95 billion in April to £8.48 billion in May and pointing to dwindling effects from Brexit.

UK industrial production was also released, increasing 0.8 percent on the month in May, a marked improvement from April's 1.0 percent decline but well short of the forecast 1.5 percent gain. Auto production, constrained by microchip shortages, fell sharply. Industrial production in Italy fell 1.5 percent in May in a broad-based decline; prior releases from France and Germany showed 0.3 percent declines for industrial production pointing to a poor month for Eurozone's goods-producing sector.

Minutes from the ECB's June meeting confirm that the central bank continues to put securing a sustainable economic recovery ahead of tackling any potential near-term inflation problems.

Easing restrictions for fully vaccinated travelers in the UK gave IAG (British Airways) a lift, up 3.0 percent as well as easyJet, up 5.3 percent, and Ryanair up 1.7 percent.

Asia Pacific

A cut in reserve requirements for Chinese banks failed to offset rising Covid cases to make for mixed results in Asia. The People's Bank of China cut the reserve requirement ratio (RRR) for all banks by 50 basis points though the Shanghai Composite could no better than end unchanged.

The region saw record Covid deaths in Thailand, record infections in South Korea, and a surge of news cases in Indonesia as well. Vietnam announced new restrictions and Australia introduced stay-at-home orders in Sydney. The All Ordinaries fell 0.9 percent.

China's CPI, reflecting weaker food prices, came in slightly below expectations, falling 0.4 percent on the month in June for a 1.1 percent annual rate versus May's 1.3 percent rate. China's PPI rose 0.3 percent on the month in June, well down from May's 1.6 percent advance.

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