Daily market review

United States

Risk-off sentiment haunted stocks again Friday with consumer discretionary stocks lagging after a surprising revenues miss and weak guidance from Amazon, which dropped 7.6 percent. Worries over the Delta variant and renewed weakness in Chinese stocks added to negative sentiment. The Dow Jones industrial average declined 0.4 percent, the S&P 500 slipped 0.5 percent, and the NASDAQ declined 0.7 percent.

Reopening hopes took a hit from a Center for Disease Control warning that the Delta variant is as contagious as chickenpox, and that vaccinated people with rare breakthrough cases can spread the disease as much as people who are unvaccinated. Restaurants and other leisure businesses lagged on the news, with Carnival Corp., the cruise line, down 4.7 percent.

Energy stocks lagged too, with ExxonMobil down 2.3 percent and Chevron down 0.7 percent despite both exceeding earnings expectations. On the positive side, materials rose as chemicals and paper packaging stocks perked up. Consumer staples rose as grocery stores and food businesses gained. Real estate fared best.

Among consumer product leaders in the news, Procter & Gamble rose 2 percent after its earnings and revenues beat. But Colgate-Palmolive declined 4.8 percent as its earnings guidance reflected pressure on margins from rising input prices. Caterpillar, the heavy equipment giant, fell 2.7 percent after disappointing guidance amid uncertainty over market conditions and inflation.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 23 cents to US$76.33 while spot gold fell US$14.83 to US$1,814.13. The US dollar rose vs. most major currencies. The US Treasury 30-year bond yield declined 4 basis points to 1.88 percent and the 10-year note yield was down 4 basis points to 1.23 percent.


Equities edged down Friday after renewed weakness during the Asian hours and worries about the Delta variant. The Europe-wide STOXX 600 declined 0.5 percent, the German DAX fell 0.6 percent, the French CAC eased 0.3 percent, and the UK FTSE 100 was down 0.7 percent.

Among sectors, lagging were travel & leisure, basic resources, and energy. Holding up best were chemicals, health care, and real estate. Banks saw gains, with UniCredit, the Italian bank, up 2.6 percent after an earnings beat.

In the travel sector, IAG, the owner of British Air, fell 7.5 percent on disappointing results, as its guidance remained suspended. Miners lagged. with iron prices down and Rio Tinto off 2.9 percent.

Earnings were mixed, with AMS, the Austrian chipmaker, down 1.7 percent, and Holcim, the Swiss building materials maker down 1.9 percent after disappointing results. Pendragon, the UK auto retailer, fell 2.2 percent after its trading update. On the positive side, Rightmove, the UK online real estate business, rose 3.4 percent after an earnings beat.

Asia Pacific

Asian equities slipped Friday after renewed selling pressure on Chinese stocks during Thursday's US session continued in Asia. Disappointing earnings from Amazon after the US hours Thursday added to the sour mood for tech-oriented growth stocks Friday.

China's CSI 300 declined 0.8 percent and the Shanghai composite slipped 0.4 percent with growth stocks lagging. A selloff in Chinese online education stocks on Wall Street continued into the Asian hours on lingering worry over China's regulatory crackdown as New Oriental Education & Technology fell another 7.7 percent. More bad news on Covid-19 cases in China and Japan undercut risk appetite too.

In Hong Kong, big tech stocks suffered, with Alibaba off 4.2 percent and Tencent down 2.6 percent. Hong Kong lagged mainland markets with the Hang Seng down 1.4 percent. Taiwan's Taiex index slipped 0.9 percent and South Korea's KOSPI fell 1.2 percent as tech lagged.

Chinese stock weakness plus rising Covid-19 cases and fear of renewed lockdowns hit Japanese markets. The Nikkei 225 index fell 1.8 percent and the broader Topix was off 1.4 percent. Losses were nearly across the board, with pharma and tech stocks lagging most. Shipping stocks held up best. Earnings disappointments contributed to the selloff, with Sumitomo Dainippon Pharma off 11 percent on a big earnings miss. Fujitsu, the IT services giant, fell 9 percent on soft guidance.

Tech stocks declined on spillover from weakness in Chinese and US markets to weaken Australian equities, with the All Ordinaries index off 0.4 percent. Buy-now-pay-later stocks weighed on the tech sector. Utilities sagged with Origin Energy down 8 percent after announcing an impairment charge. Energy stocks extended the week's losses. On the positive side, real estate stocks held up relatively well, along with transportation infrastructure companies.

In economic news, Japan's industrial production rose 6.2 percent in June, rebounding strongly from a drop of 6.5 percent in May. Output of motor vehicles, production machinery, and electronic parts and devices increased, partly offset by a drop in the output of transport equipment.

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