Daily market review

United States

Equities edged up but held slim ranges Monday as the market awaited news this week including the Federal Reserve policy announcement and key earnings. The Dow Jones industrial average and the S&P 500 both rose 0.2 percent, and the NASDAQ was flat.

Sectors were mixed with energy stocks leading the winners on strength in integrated oil companies. Consumer discretionary rose on gains in retailers, plus materials gained with support from industrial and precious metals. Tech and industrials lagged, while health care trailed, with hospitals and managed care down.

Worries over the Delta variant depressed sentiment, along with a selloff in Chinese markets after China's latest regulatory crackdown on online businesses. Investors noted unexpected weakness in US home sales and Dallas Fed manufacturing reports, which played into the peak growth theme.

Among companies in the news, Lockheed Martin fell 3.3 percent after an earnings miss. RPM, the manufacturer, fell 1.0 percent after disappointing guidance. Tal Education Group, the US-listed Chinese education business, dropped 27 percent after Chinese regulators imposed drastic limits on the online educators.

On the positive side, Southern Copper rose 2.6 percent after an earnings and revenues beat. Hasbro, the iconic toy business and classic stay-at-home stock, rose 12 percent after earnings, revenues, and margins all topped expectations.

Markets are awaiting earnings this week from Facebook, Apple, Amazon, Microsoft, Google, Caterpillar, Ford, ExxonMobil, and many others, plus the Fed policy announcement due on Wednesday.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.07 to US$74.70 while spot gold fell US$9.05 to US$1,797.54. The US dollar fell vs. most major currencies. The US Treasury 30-year bond yield rose 2 basis points to 1.94 percent and the 10-year note yield rose 2 basis points to 1.29 percent.


Equities ended flat to weaker Monday with a mixed bag of corporate news and negative Covid news in focus. The Europe-wide STOXX 600 eased 0.1 percent, the German DAX declined 0.3 percent, the French CAC was off 0.2 percent, and the UK FTSE 100 was flat.

A surprisingly negative German Ifo business sentiment reading weighed on sentiment, as did restrictions imposed by European countries to curb the spread of Covid-19, and concern that economic momentum in the US and Asia has stalled in response to the new wave of cases. Fallout from a selloff in Chinese markets amid a Chinese regulatory crackdown on tech and online education businesses hit Europe too.

Among companies in the news, Prosus, the Dutch internet investor with a big stake in Tencent, fell 9 percent on China's crackdown on Tencent and other online giants. Meanwhile, Philips, the Dutch electronics maker, fell 4.2 percent after its results matched expectations and it announced new share buybacks.

On the positive side, RyanAir, the budget airline, rose 3.3 percent after reporting an uptick in second-quarter bookings. Bawag, the Austrian bank, rose 5 percent on an earnings beat and better guidance.

In economic news, German business sentiment saw a surprising drop, according to the IFO Institute. The IFO Business Climate Index fell to 100.8 in July from a revised 101.7 (101.8) in June, coming in below the median result of 102.3 in the Econoday survey of forecasts, with expectations off sharply.

Asia Pacific

Asian markets mostly weakened Monday with Chinese markets crushed by China's latest regulatory measures while Japan outperformed on its return from a four-day weekend.

China's crackdown on online tutoring businesses knocked down education stocks, and new limits on property and tech businesses hit these sectors hard. China's CSI 300 plunged 3.2 percent and the Shanghai composite was down 2.3 percent.

Hong Kong lagged, with the Hang Seng off a shocking 4.1 percent. Scholar Education Group dropped 46 percent, while New Oriental Education Group lost 47 percent in Hong Kong trading after regulators imposed an array of limits on online educators. Big tech shares were notable losers too, with Tencent down 7.7 percent and Meituan off 14 percent as regulators announced more cuts in what they considered permissible businesses. Overseas investors were notable sellers as they are heavily exposed to the Chinese regulatory crackdown.

Separately, the Taiwan Taiex declined 1.0 percent and South Korea's KOSPI lost 0.9 percent as the Chinese weakness spilled over, and foreign investors pulled back.

Japanese markets rose to catch up with gains made overseas while Tokyo was closed Thursday and Friday for the start of the Olympics. The Nikkei rose 1.0 percent and the broader Topix gained 1.1 percent. Gains were hemmed in by ongoing worries, however, over restrictions imposed to contain the worsening pandemic in Japan, Korea, and elsewhere.

Australian equities were split with mining stocks advancing while energy and precious metals fell back, leaving the All Ordinaries index unchanged. Miners BHP (up 1.3 percent) and (up 2.4 percent) advanced on rising iron ore prices while energy stocks were hit as oil prices declined amid expectations the pandemic will undercut demand. Oil producers, Santos fell 2 percent, and Woodside was down 1.3 percent.

Looking ahead*

In Asia/Pacific, Chinese industrial profits and Korean GDP reports are due. In Europe, Eurozone M3 and UK CBI Distributive Trades figures are scheduled. In North America, US durable goods, US Case-Shiller home prices, US FHFA house prices, US consumer confidence, and Richmond Fed manufacturing reports are on tap.

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