Daily market review

United States

Dip-buying in growth stocks continued Friday for a second day to lead major equity indexes higher and recover Monday's sharp losses. The Dow Jones industrial average rose 0.7 percent, the S&P 500 gained 1.0 percent, and the NASDAQ also rose 1.0 percent.

Expectations for strong quarterly results from the FANMAG complex helped Facebook rise 5.3 percent while Google rose 3.4 percent to help communications services lead the market. Twitter rose 3.1 percent after revenues topped expectations, and Snap rallied 23 percent after the Snapchat parent company blew past earnings and revenues expectations.

Among other megacap winners, Amazon rose 0.5 percent, Microsoft was up 1.2 percent, and Apple rose 1.2 percent.

Lagging were financials, with money center banks weaker. Airlines depressed industrials as they gave back gains from earlier in the week, plus Honeywell declined 1.5 percent after weak aerospace earnings. Materials sagged on weaker metals. Energy trailed with oilfield services off the most.

Among companies in the news, American Express rose 1.4 percent after a big earnings beat. On the downside, Intel fell 5.3 percent despite topping earnings and revenues expectations after the company said chip shortages would persist.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 43 cents to US$74.06 while spot gold declined US$5.36 to US$1,801.23. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield rose 1 basis point to 1.92 percent and the 10-year note yield was flat at 1.28 percent.


Equities extended their recent gains Friday with cyclicals leading after upbeat earnings and positive sentiment after Thursday's supportive European Central Bank policy announcement. The Europe-wide STOXX 600 rose 1.1 percent, the German DAX gained 1.0 percent, the French CAC advanced 1.4 percent, and the UK FTSE 100 rose 0.9 percent.

Dip-buying continued as some investors argued that concerns about the Delta variant and new lockdowns have been overblown, along with corporate comments describing robust business conditions. Strong European purchasing managers data added to positive sentiment.

Among sectors, autos & parts fared best, with Valeo, the French partsmaker, up 5.2 percent after strong first-half results. Daimler was another winner, up 5 percent after an analyst upgrade. Basic resources outperformed with support from rising industrial metals prices. BHP rose 1.3 percent to end up 3 percent on the week.

Utilities were in focus on a report that Spanish utility Iberdrola, up 0.7 percent, is considering acquisitions, possibly including German utility RWE, up 1.7 percent, and E.ON, the German utility, up 1.5 percent.

In economic news, flash Markit PMI survey data for the Eurozone showed economic conditions improved further in July, with a moderation in the manufacturing sector outweighed by the strongest increase in service sector activity in 15 years. The flash manufacturing index for July was 62.6, down from the final estimate of 63.4 in June. The flash estimate for the service sector business activity index in July was 60.4, up sharply from the final estimate for June of 58.3. Together these give a flash estimate for the composite output index for July of 60.6, up from the final estimate of 59.5 in June.

Asia Pacific

Asian markets were mixed Friday in mostly directionless trading with Chinese markets lagging on the latest Chinese government crackdown on tech-oriented companies.

Chinese markets sold off on reports that Chinese regulators may impose massive new penalties and curbs on Didi Global, the ride-sharing giant, following its listing in New York over the objection of Chinese authorities. Didi dropped about 11 percent Thursday and was down another 14 percent pre-market Friday. Chinese official action to rein its big tech companies has become a huge overhang for markets. Risk appetite also suffered Friday from news of new lockdowns in eastern China as coronavirus cases rebound.

China's CSI 300 declined 1.2 percent and the Shanghai composite was down 0.7 percent. Hong Kong fared even worse, with the Hang Seng down 1.5 percent.

Hong Kong saw weakness centered in tech, education, and property sectors, where the Chinese government has stepped up its regulatory crackdown. Among companies in focus, New Oriental Education & Technology dropped 41 percent as China targets online tutoring companies.

Separately, the Taiwan Taiex was flat, and South Korea's KOSPI firmed 0.1 percent. Among the day's movers, Humasis, a Korean medical equipment provider, rose 3.5 percent after a big order from Brazil for testing equipment. NH Investment & Securities, a Korean financial firm, rose 2.5 percent on an earnings beat. On the downside, Hyundai Motors fell 1.3 percent after warning of parts shortages, and automaker Kia eased 1.1 percent despite an earnings beat.

Japanese markets were on holiday for the start of the Olympics. Markets noted case counts in Tokyo and other major cities continued rising, with a fifth wave of the virus evidently under way.

Australian equities recovered early losses to manage modest gains despite the worsening coronavirus situation as investors look to the Reserve Bank of Australia to offset the short-term shock to the economy, and anticipate progress in controlling the pandemic later this year. The All Ordinaries index edged up 0.2 percent.

Most sectors saw limited moves with biotechs and buy-now-pay-later stocks bouncing back from Thursday's selloff. Lagging were financials, casinos, and energy, as oil producers gave back Thursday's gains.

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