Daily market review

United States

Equities were narrowly mixed Thursday after a two-day bounce following Monday's steep selloff. The Dow Jones industrial average rose 0.1 percent, the S&P 500 rose 0.2 percent, and the NASDAQ gained 0.4 percent.

A surprisingly poor US jobless claims report and softer-than-expected existing home sales data undercut cyclicals and fed the peak growth narrative, along with speculation that another Covid wave would hurt the recovery. Earnings have been coming in mostly stronger than expected but reaction has been muted.

Growth stocks were better performers Thursday after lagging during the brief return of the reflation trade on Tuesday and Wednesday. On Thursday, financials and energy lagged while the FANMAG complex returned to favor. Facebook gained 1.4 percent, Microsoft rose 1.7 percent, and Amazon 1.5 percent, as some said they were simply oversold.

Among companies reporting, Domino's Pizza rallied 15 percent on an earnings and revenues beat, plus same-store sales rose 3.5 percent despite huge year-ago demand for pizza delivery during 2020 lockdowns. Texas Instruments fell 5.3 percent as the market reacted badly to its lukewarm guidance, despite a blowout quarter.

In economic news, jobless claims unexpectedly rose in the week ended July 17, increasing 51,000 to 419,000, while economists had mostly expected a decline to 350,000. The advance brought the number of first-time applicants to its highest since mid-May, after stabilizing below 400,000 for three consecutive weeks. Meanwhile, existing home sales in June rose 1.4 percent to a 5.860 million annual rate which was, however, marginally below expectations centering on a 5.9 million rate.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.41 to US$73.63 while spot gold rose US$2.52 to US$1,806.59. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield fell 5 basis points to 1.89 percent and the 10-year note yield fell 4 basis points to 1.25 percent.


Equities mostly rose Thursday after a supportive policy statement from the European Central Bank and positive earnings results. Travel & leisure and financials outperformed. The Europe-wide STOXX 600 and the German DAX both gained 0.6 percent, the French CAC rose 0.3 percent, and the UK FTSE 100 fell 0.4 percent.

The ECB adopted a more dovish tone after its latest rate-setting meeting. The bank's new forward guidance added more aggressive language to say it "expects key rates to remain at their present or lower levels until it sees inflation reaching two per cent well ahead of (the) projection horizon and durably for the rest of the projection horizon."

On a busy earnings day, ABB, the Swedish-Swiss manufacturer, rose 1.5 percent after posting positive quarterly results. Morgan Sindall, the UK construction company, jumped 13 percent after raising its guidance. Restore, the UK documents business, rose 10 percent after a takeover offer from Marlowe, a rival business. Electrolux, the Swedish appliance maker, rose 6 percent after an earnings beat.

On the downside, Roche, the Swiss pharma, fell 3.6 percent after a disappointing quarterly update. Unilever dropped 6 percent to drag down the FTSE 100 after the consumer products giant cut its guidance due to surging commodities prices.

Asia Pacific

Better global risk appetite helped cyclicals outperform again to lift most equities markets Thursday and commodities heavyweight BHP advanced to boost Australia despite worrisome virus headlines.

Analysts noted, however, that the market still faces the pandemic overhang, Covid-19 cases continue to rise, and equities advances were not broad-based, and trading was light. Reports said Tokyo is facing a very worrisome Covid situation just as the Olympics gets underway.

Value stocks outperformed to help mainland Chinese markets edge up with the CSI 300 up 0.2 percent and the Shanghai composite up 0.3 percent, with good foreign buying. Sentiment was supported by news of meetings between senior US and Chinese diplomats expected later this week. Among sectors, health care and telecom lagged while materials and financials outperformed.

Among companies in focus, China Evergrande, the troubled property developer, rose 8 percent after appearing to resolve a dispute with a key lender, China Guangfa Bank. On the downside, Shanghai Fudong Microelectronics fell 8 percent after announcing a new share issuance.

Hong Kong outpaced the region as the Hang Seng jumped 1.8 percent on strength in energy, technology, and property, including the relief rally in China Evergrande. Separately, the Taiwan Taiex gained 0.7 percent as it rebounded from two days of declines.

South Korea's KOSPI gained 1.1 percent on positive earnings news despite another record rise in Covid cases. Among the day's movers, POSCO, the steelmaking giant, rose 4.7 percent, Woori Financial gained 3.6 percent, and Naver gained 2.8 percent on earnings beats.

Japanese markets were on holiday for the start of the Olympics. Daily infection rates in Tokyo and elsewhere in Japan continue to rise, but vaccinations have accelerated too.

A rally in commodity producers and other cyclicals boosted Australian equities and bond yields. The All Ordinaries index rose 1 percent. Most sectors rose, paced by energy after a positive trading update from oil and gas driller Santos, which gained 2.6 percent. Rising iron ore prices lifted materials. Lithium miners were notable winners, with Lynas Rare Earths up 9 percent on news of a government grant to explore a new refining process. Other winners included banks and airlines, as they rebounded from recent weakness. Lagging were tech stocks, including buy-now-pay-later stocks.

Looking ahead*

In Asia/Pacific, the Singapore CPI report is due. In Europe, UK retail sales and PMI composite flash reports are due from France, Germany, Eurozone, and the UK. In North America, Canada retail sales and US PMI composite reports are on tap.

Global Stock Market Recap

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Global Currency Recap

Commodities and currencies