Daily market review

United States

US markets hovered near record highs Friday in summer-thinned trading, with little impetus in either direction. Sentiment remained buoyant in response to upbeat company news and expectations for continued earnings strength. The Dow Jones industrial average was flat, the S&P 500 rose 0.2 percent, and the NASDAQ was unchanged.

A surprisingly weak US consumer sentiment reading helped US bond yields retreat Friday. That helped growth stocks outperform, including Microsoft, which rose 1.1 percent. Chip stocks bounced back after falling earlier in the week on negative analyst commentary. Chipmaker Nvidia rose 1.4 percent. Pharma outperformed too, with Pfizer up 2.6 percent after the US Food and Drug Administration recommended a third Covid vaccination shot for people with compromised immune systems.

Among companies in focus, Disney rose 1 percent after topping earnings expectations. Ebay, the online market, gained 7.5 percent after an earnings beat. Airbnb rose 1.1 percent on strong results but it warned the Delta variant could restrain business. DoorDash, the food delivery service, rose 3.5 percent on strong quarterly results but investors wonder about its prospects post-pandemic.

In US economic news, consumer sentiment index showed a "stunning loss of confidence" early in the month, the University of Michigan said. The index plunged 11.0 points in August from July's 81.2 to 70.2, below the August 2020 reading of 74.1 as well as the 2020 pandemic low of 71.8, and far below Econoday's range of expectations.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 99 cents to US$70.19 while spot gold rose US$25.22 to US$1,778.62. The US dollar fell vs. most major currencies. The US Treasury 30-year bond yield dropped 8 basis points to 1.93 percent and the 10-year note yield fell 7 basis points at 1.29 percent.


Equities continued to trend upward Friday after two weeks of gains, propelled by earnings and recovery hopes supported by rising European vaccination rates. The Europe-wide STOXX 600 firmed 0.2 percent, the German DAX rose 0.3 percent, and the French CAC firmed 0.2 percent. The UK FTSE 100 was up 0.4 percent.

Among sectors, best were real estate and utilities. Other winners included food & beverage, insurance, banks, travel & leisure, and chemicals. Lagging were technology, industrials, basic resources, and media.

Among companies in focus, Dax constituent Deutsche Wohnen, the German property company, rose 0.8 percent after an earnings beat. Adidas, the German sporting goods leader, rose 1.6 percent after announcing it will sell its Reebok unit. Zooplus, the online pet food retailer, surged by 40 percent after agreeing to be acquired by private equity.

Asia Pacific

Asian markets declined Friday with South Korea and Taiwan lagging as big semiconductor stocks took another hit and regional Covid-19 worries mounted. Asia appeared disconnected from other major markets, with the US and Europe setting record highs.

Chinese markets came under pressure again as regulatory worries hurt tech firms. Meanwhile, risk appetite suffered as China shut another port facility over Covid concerns. China's benchmark CSI 300 declined 0.6 percent and the Shanghai composite eased 0.2 percent. China will release a batch of economic reports early next week expected to confirm the economy is slowing.

Tech giants Alibaba and Tencent, both down 2.5 percent, weighed on the Hong Kong market. The Hang Seng fell 0.5 percent.

South Korea extended its remarkable seven-day string of losses with the KOSPI down another 1.2 percent with heavy sales by foreign investors. Negative sellside comments on the chip outlook hit the semiconductor sector. SK Hynix, the big chipmaker, is off 14 percent over the last five days. Separately, Taiwan's benchmark Taiex was off 1.4 percent as its tech-dominated market remained under pressure.

Japan's markets were flat to lower on fallout from chip weakness and as reopening stocks came under pressure. Japan's Nikkei eased 0.1 percent while the broader Topix rose 0.2 percent. Pressure on the government to impose new lockdowns continued to rise with reports the pandemic is out of control in Tokyo and other cities. Earnings were an offsetting positive, with Recruit Holdings, the Japanese human resources firm, up 10 percent on an earnings beat.

Earnings and share buybacks helped Australian markets outperform the region with the All Ordinaries index up 0.5 percent. The Covid situation continues unabated in Australia but the market is looking ahead and anticipates more government support to offset the near-term hit. Gains were across the board, with health care, utilities, and gaming stocks outperforming. Banks, mining contractors, and grocery stores were notable winners. Materials lagged on weakness in iron ore.

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