Daily market review

United States

Equities edged up Monday in cautious trading ahead of US economic data and earnings later in the week. The Dow Jones industrial average and the S&P 500 both rose 0.4 percent, and the NASDAQ firmed 0.2 percent.

Financial stocks outperformed as the market anticipates positive quarterly results for the sector starting with JP Morgan and Goldman Sachs on Tuesday. Markets are also watching for the next batch of US inflation readings with US CPI and PPI reports due on Tuesday and Wednesday. Plus, Fed Chair Jerome Powell is due to speak on Wednesday and Thursday.

Other outperforming sectors included materials, health care, communications services, and real estate. Lagging were consumer staples, industrials, and information technology.

Among companies in focus, Virgin Galactic fell 17 percent after saying it will offer more shares to the public. Didi Global fell 7 percent after the Chinese government took down more of its apps. On the positive side, L Brands rose 4.2 percent after it said it would proceed with a planned spinoff of its Victoria's Secret unit. Walt Disney rose 4.2 percent after a positive comment from JP Morgan and impressive results for its Black Widow movie debut.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 30 cents to US$75.27 while spot gold declined US$2.18 to US$1,806.18. The US dollar rose vs. most major currencies. The US Treasury 30-year bond yield rose 1 basis point to 2.00 percent and the 10-year note yield gained 1 basis point to 1.37 percent.


Defensive stocks outperformed to lead European equity indexes slightly higher Monday but reopening plays were hurt by virus worries. The Europe-wide STOXX 600 and the German DAX both rose 0.7 percent, the French CAC rose 0.5 percent, and the UK FTSE 100 was up 0.1 percent.

Best performing sectors were real estate, utilities, health care, and telecom, while worst were travel, basic resources, retail, and banks. Travel stocks were hurt in particular by expectations that several European countries will tighten travel rules to counter the spread of the Delta variant, even as the UK appears set to ease its restrictions next week.

Among companies in the news, Angler Gaming, the Maltese gambling services firm, dropped 23 percent on a profits warning. Atos, the French IT services giant, fell 18 percent after lowering its guidance. Wizz Air, the airline, fell 2.5 percent after a downgrade at Morgan Stanley.

Asia Pacific

Declining market interest rates lifted Asian equities markets again Monday with growth stocks leading, and Japanese markets outperforming. Markets also got support from the People's Bank of China's bank reserve ratio cut Friday.

Japanese stocks rallied across the board, tracking Friday's gains on Wall Street. The Nikkei jumped 2.3 percent and the broader Topix advanced 2.1 percent. An upside surprise in Japanese machinery orders data provided additional support, with machinery stocks leading, along with electric appliances, metals, and warehouses.
Chinese equities followed the lead of US markets higher Monday. The benchmark CSI 300 rose 1.3 percent and the Shanghai composite rose 0.7 percent. Hong Kong markets lagged with the Hang Seng index up 0.6 percent as weakness in energy and financials offset gains elsewhere.
The rally in tech stocks gave Korea and Taiwan a lift as the KOSPI and the Taiex both rose 0.9 percent.

Australian markets rose with support from Friday's PBOC cut in bank reserve requirements but gains were limited by more bad news on the coronavirus. The All Ordinaries index rose 0.8 percent. Best were materials as iron ore advanced after the PBOC action. Real estate and banks also outperformed. Consumer discretionary stocks lagged on a selloff in gaming stocks, along with consumer staples, on weakness in grocery stores.

Among companies in focus, ZTE, the Chinese telecom, rose 13.5 percent after raising its profits guidance. Ganfeng Lithium, the battery maker, gained 8.2 percent on expectations for more Chinese government support for the sector. Yasakawa, the Japanese robotics leader, rose 6.1 percent after increasing its guidance.

In economic news, Japan's private sector machinery orders (excluding volatile items) rose 7.8 percent on the month in May after increasing 0.6 percent in April, and gained 12.2 percent on the year after advancing 6.5 percent previously. Manufacturing orders rose 2.8 percent on the month, down from growth of 10.9 percent previously, while growth in non-manufacturing orders rebounded from a fall of 11.0 percent to an increase of 10.0 percent.

Looking ahead*

In Asia/Pacific, Chinese merchandise trade data are due. In Europe, German CPI, Swiss producer and import prices, and the French CPI report are scheduled. In North America, US NFIB small business optimism, US CPI, and US Treasury budget figures are due.

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