Daily market review

United States

Strength in megacaps kept the major stock averages in positive territory Thursday while much of the rest of the market sagged. The Dow Jones industrial average was flat, the S&P 500 firmed 0.3 percent to a new record high, and the NASDAQ rose 0.4 percent.

Value stocks fell back after outpacing growth this week as the reopening trade lost steam, possibly reflecting worries about the Delta variant. A hotter-than-expected US producer price reading was another negative.

Financials, materials, industrials, and energy lagged, with oil supermajors and servicers hit hard as oil prices down after the International Energy Agency cut its demand forecast.

Among sectors, best were information technology, health care, and real estate, while lagging were energy and materials. Among megacaps, Apple was the leader, up 2.1 percent, with Microsoft up 1 percent, Google up 0.7 percent, and Tesla up 2 percent.

On the downside, Micron fell 6.4 percent to lead chipmakers lower after an analyst downgrade. Moderna rose 1.6 percent to recover some of Wednesday's losses and lead health care higher.

In US economic news, producer prices advanced another 1.0 percent in July, the same pace as in June, topping Econoday's median expectation of 0.6 percent. The highest forecast was 0.9 percent. Year-over-year producer prices were up 7.8 percent, the highest 12-month rate since the data were first calculated in November 2010, also exceeding expectations and accelerating from 7.3 percent in June.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 34 cents to US$71.18 while spot gold rose US$1.43 to US$1,753.40. The US dollar rose vs. most major currencies. The US Treasury 30-year bond yield rose 1 basis point to 2.00 percent and the 10-year note yield rose 4 basis points to 1.36 percent.


Equities were mixed to mostly better Thursday with earnings lifting financials and telecom. The Europe-wide STOXX 600 firmed 0.1 percent, the German DAX rose 0.7 percent, and the French CAC gained 0.4 percent. The UK FTSE 100 slipped 0.4 percent as commodity-linked stocks lagged.

Aegon, the Dutch insurer, jumped 7.3 percent after an earnings beat and increased dividend. NN Group, the Dutch financial services firm, rose 2.7 percent on an earnings beat, while Aviva, the UK life insurer, rose 3.5 percent after announcing a big share buyback. Telecom also outperformed with Deutsche Telekom up 3.1 percent after topping earnings expectations and raising its guidance.

On the downside, basic resources lagged as the sector reckoned with a slower growth outlook in China and elsewhere due to the pandemic. Energy stocks sagged too as oil prices came under pressure on concern over soft demand as the International Energy Agency cut its 2021 demand forecast. Royal Dutch Shell slipped 1.4 percent and BP declined 0.7 percent to weigh on UK stock averages.

Among other companies in focus, Delivery Hero, the German online food delivery service, slipped 7 percent despite a strong trading update. Nordex, the German wind turbine manufacturer, fell 3.2 percent after disappointing guidance.

Asia Pacific

Asian markets weakened Thursday with China hurt by the government's latest regulatory crackdown and concerns about spreading Covid-19 in China and the wider region.

Chinese markets were under pressure after the government announced its next target, the online insurance business, and investors wondered what regulators would target next. Private education firms also lagged as regulators pledged new controls. The broad CSI 300 slipped 0.8 percent and the Shanghai composite was off 0.2 percent. Offsetting some of the weakness was speculation that China's slowing economy and spreading Covid cases would spur more official policy support. News that a Shanghai port facility would shut due to Covid added to the unease.

Hong Kong weakened with financials leading the way down after Beijing said it would target online insurance companies. The Hang Seng ended down 0.5 percent. Health care also lagged on regulatory worries.

South Korea extended its recent string of losses with the KOSPI down 0.4 percent. Chip stocks came under pressure after a negative outlook from Morgan Stanley on Micron. Separately, Taiwan's benchmark Taiex was unchanged.

Japan's markets were flat to lower with the coronavirus situation in focus, as usual. Spillover from China's regulatory crackdown undermined risk appetite, along with comments from Fed officials pointing toward tapering. Japan's Nikkei eased 0.2 percent while the broader Topix was flat.

Australian markets were flat to weaker with sentiment undercut by the worsening coronavirus situation and fallout from China's latest regulatory crackdown. The All Ordinaries index managed to edge up 0.1 percent as sectors were mixed. Telecom got a boost from news of a buyback at Telstra, which rose 3.7 percent. Information technology, health care, and financials lagged.

Looking ahead*

In Asia/Pacific, Indian merchandise trade and Hong Kong GDP figures are due. In Europe, French unemployment, Swiss producer and import prices, French CPI, and Eurozone merchandise trade reports are scheduled. In North America, US import and export prices and US consumer sentiment reports are on tap.

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