Daily market review

United States

Growth stocks outperformed while value stocks lagged Wednesday on a busy day for earnings results as reaction to good news was muted. The Dow Jones industrial average slipped 0.4 percent, the S&P 500 was flat, and the NASDAQ firmed 0.7 percent.

Reaction was limited to the Federal Reserve's policy announcement, which matched expectations for a status quo policy. Some said Fed Chair Jerome Powell's comments leaned to the dovish side as he repeated the Fed expects inflation to cool and that policy makers remain far from ready to taper asset purchases.

Earnings came in strong from megacaps, with Google up 3.2 percent after beating expectations, though Apple ended down 1.2 percent on disappointing guidance. Microsoft gave up early gains to end down 0.1 percent despite topping expectations. AMD rallied 8 percent after beating expectations and raising its guidance.

Among others reporting, Boeing gained 4.2 percent after posting an unexpected profit, while fast-food leader McDonalds fell 1.9 percent despite an earnings and sales beat, as investors focused on rising costs.

Other winning sectors included energy and health care, while defensives lagged, including real estate, utilities, and consumer staples.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 6 cents to US$74.57 while spot gold rose US$9.46 to US$1,809.89. The US dollar fell vs. most major currencies. The US Treasury 30-year bond yield fell 1 basis points to 1.88 percent and the 10-year note yield fell 2 basis points to 1.23 percent.


Earnings news boosted equities Wednesday though spillover weakness from Asian markets lingered. The Europe-wide STOXX 600 rose 0.7 percent, the German DAX firmed 0.3 percent, the French CAC rose 1.2 percent, and the UK FTSE 100 firmed 0.3 percent.

Focus remained on Asia, which was steadier but under pressure after a two-day meltdown in Chinese markets on a Chinese regulatory crackdown.

Technology, travel & leisure, and retail outperformed while basic resources and banks lagged. Among retail stocks, Kering, the French luxury goods conglomerate, rose 3.6 percent on strong earnings. News that the UK would relax quarantine rules supported travel & leisure stocks, with British Airways operator IAG up 3.8 percent. Capgemini, the French tech services giant, rose 3.8 percent after raising its guidance. Barclays gained 2.0 percent after announcing an earnings and revenues beat and new share buyback.

On the downside, Adecco, the Swiss recruiter, declined 8 percent after announcing an acquisition. Separately, Konecranes, the Finnish crane maker, fell 7 percent after reporting an earnings miss and supply chain disruptions. Sodexo, the French food services leader, fell 2 percent after announcing plans to restructure.

Asia Pacific

Asian equities mostly weakened Wednesday on carryover from Tuesday's Wall Street selloff in growth stocks as regional fallout continued from China's regulatory crackdown.

China's CSI 300 firmed 0.2 percent and the Shanghai composite declined 0.6 percent as worries persisted over Chinese regulatory moves that have so far targeted tech/online, education, and property businesses. Health stocks came under pressure Wednesday as investors worried this would be the next sector facing regulatory action. Chinese state media called the selloff overdone and said fundamentals remain robust.

Hong Kong recouped part of its recent losses, with the Hang Seng up 1.5 percent. Some of the most beaten-up stocks saw bargain-hunting after huge losses Monday and Tuesday. Separately, Taiwan's Taiex index declined 0.8 percent as tech stocks were under pressure after Tuesday's Wall Street weakness. Meanwhile, South Korea's KOSPI firmed 0.1 percent, with support from strength in big tech stocks. Samsung Electronics gained 0.9 percent on expectations for strong earnings news.

Another jump in Japanese Covid-19 cases hit Japanese markets, along with risk aversion stemming from regional market weakness after China's regulatory crackdown. New Covid cases in Tokyo hit a record 2,848, Nikkei Asia reported. The Nikkei 225 index slipped 1.4 percent and the broader Topix fell 0.9 percent. Most sectors lost ground, with communications and metals products lagging.

More bad Covid-19 news and growth stock weakness on Wall Street undercut Australian equities, leaving the All Ordinaries index down 0.7 percent. Sydney extended its lockdown another four weeks as new cases ticked up. Most sectors weakened, with technology, banks, and energy lagging, along with gaming stocks and retailers.

Looking ahead*

In Asia/Pacific, no major data releases are due. In Europe, French PPI, German unemployment, Eurozone EC economic sentiment, Italian PPI, and German CPI figures are scheduled. In North America, US GDP, US jobless claims, and US pending home sales reports are on tap.

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