Daily market review

United States

Most sectors recovered Monday's losses Tuesday on buy-the-dip thinking, with value groups leading the bounce after suffering the most Monday. The Dow Jones industrial average and the NASDAQ both rose 1.6 percent while the S&P 500 gained 1.5 percent.

Industrials and financials led the recovery. Tech stocks also rebounded, with Apple up 2.6 percent. Restaurants and retail helped consumer discretionary bounce back after notable weakness Monday.

Among companies in focus, HCA Holdings, the hospital chain, rose 14 percent after blowing away earnings expectations and boosting its outlook. Pfizer also outperformed, up 2.2 percent, as investors see rising need for its vaccines. Among other top performers, Southwest Air rose 6 percent and GE gained 5.8 percent to recoup Monday's losses.

Materials lagged, miners sold off, while consumer staples trailed after leading Monday with Philip Morris down 3 percent despite an earnings beat. PPG, the materials business, fell 4.4 percent after an earnings miss reflecting rising input prices and supply disruptions.

In US economic data, housing starts increased 6.3 percent in June to an annual rate of 1.643 million, versus Econoday's consensus for 1.590 million. Building permits, on the other hand, were down 5.1 percent to an annual rate of 1.598 million from 1.683 million, below Econoday's consensus of 1.700 million.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.54 to US$69.62 while spot gold fell US$1.03 to US$1,810.05. The US dollar gained vs. most major currencies. The US Treasury 30-year bond yield rose 5 basis points to 1.87 percent and the 10-year note yield gained 2 basis points at 1.21 percent.


Dip-buying helped European equities recover Tuesday after Monday's steep losses, with support from some positive company results, and some analysts saying the selloff was overdone. The Europe-wide STOXX 600 rose 0.5 percent, the German DAX gained 0.5 percent, the French CAC gained 0.8 percent, and the UK FTSE 100 gained 0.5 percent.

Among sectors, best were basic resources, financial services, banks, construction & materials, chemicals, industrials, and media. Lagging were utilities, travel & leisure, technology, health care, personal & household goods, and telecom.

Among companies in focus, UBS rose 5.3 percent after an earnings beat powered by surging fee income. Miners were powered by BHP, up 2 percent, after its latest production update and guidance. Assa Abloy, the Swedish manufacturer, rose 4.3 percent after an upgrade at Morningstar.

Asia Pacific

Virus fears kept equities on the defensive Tuesday, with declines led by Taiwan, Japan, and Hong Kong.

Mainland Chinese markets held up better with the CSI 300 and the Shanghai composite both down 0.1 percent despite fallout from the US and its allies naming China as the source of malicious hacking activity. Worst were value names, while growth fared better, with tech, health care best. Financials dropped on disappointment the loan prime rate was unchanged, despite expectations for a rate cut. Other losers included utilities and telecoms.

Hong Kong lagged on weakness in property and banking, with the Hang Seng down 0.8 percent. Evergrande, the troubled Chinese developer, fell 10 percent, amid worries it is facing a liquidity crisis.

Taiwan stocks tracked US markets lower as the Taiex fell 1.5 percent. South Korea's KOSPI eased by 0.3 percent amid fallout from the US selloff plus rising Covid-19 case counts.

Risk appetite took a hit in Japanese markets from the selloff on Wall Street and concern over Covid-19 case counts, more lockdowns, and worry that the Olympics may become a huge super-spreader event. The Nikkei and the broader Topix both fell 1.0 percent. Japanese bond yields dropped as they saw flight to safety buying as risk assets dropped.

Wall Street's selloff and virus worries undercut Australian markets as the All Ordinaries index fell 0.4 percent. Big miners and oil stocks were among the day's worst performers. Among the day's notable movers, BHP, the miner, fell 2.5 percent, AGL Energy, the utility, fell 2.4 percent, and Qantas, the airline, was off 2.4 percent.

Looking ahead*

In Asia/Pacific, the Japanese merchandise trade and Australian retail sales reports are due. In Europe, the UK public sector borrowing report is scheduled. In North America, weekly US MBA mortgage applications and the US EIA petroleum status report are on tap.

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Global Bond Market Recap

Global Currency Recap

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