Daily market review

United States

Major equity indexes retreated moderately from recent highs Thursday with news of bombing deaths at the Kabul airport weighing on the market, along with comments from Federal Reserve officials. Energy stocks fared worst as oil prices gave up some of their recent gains. The Dow Jones industrial average fell 0.5 percent, the S&P 500 slipped 0.6 percent, and the NASDAQ also lost 0.6 percent.

Fed Presidents James Bullard and Robert Kaplan both reiterated their recent view that the Fed needs to start tapering asset purchases soon. Investors remained on tenterhooks awaiting the week's featured event: Fed Chair Jerome Powell's talk scheduled at 10 am ET Friday during the Fed's annual Jackson Hole gathering, now being held online.

Markets remained weaker after news that US service members were among those killed and injured in explosions near the Kabul airport, along with multiple civilians. US military officials said the Kabul airfield faces many more threats of attacks and the situation remained chaotic.

Most stock sectors weakened: declines in auto and retail stocks weighed on the consumer discretionary sector. Health care and consumer staples also lagged. On the positive side, real estate, communication services, and financials held up best.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 66 cents to US$71.58 while spot gold rose US$1.54 to US$1,792.48. The US dollar rose vs. most major currencies. The US Treasury 30-year bond yield was down 1 basis point at 1.94 percent and the 10-year note yield was unchanged at 1.34 percent.


Equities edged down in cautious trading Thursday, with spillover weakness from a renewed selloff in Chinese markets. The Europe-wide STOXX 600 eased by 0.3 percent, the German DAX declined 0.4 percent, and the French CAC eased 0.2 percent. The UK FTSE 100 slipped 0.4 percent.

Markets were cautious ahead of Fed Chair Powell's speech scheduled Friday, though investors don't expect any strong signal of near-term tapering of Fed asset purchases. German Gfk consumer sentiment figures came in on the gloomy side, adding to investor caution.

Stock sectors were mixed, with travel/leisure, retail, and basic resources lagging. Holding up best were construction/materials, and media stocks. A retreat in oil prices after several days of strong gains undercut energy stocks, while weakness in metals hurt miners. BHP Group slipped 1.2 percent, and Anglo American, the world's biggest platinum producer, fell 1.4 percent.

Among companies in the news, Vivendi, the French media giant, rose 2.6 percent after an analyst upgrade. On the downside, Polymetal, the UK precious metals miner, slipped 3.2 percent after an earnings and revenues miss.

In economic news, the German GfK survey confirmed little change in consumer sentiment in August but signals a renewed deterioration in September. The climate indicator dipped just 0.1 point to a weaker revised minus 0.4 in mid-quarter and is seen falling to minus 1.2 next month. The September projection was on the weak side of the market consensus and still well below normal levels of around 10.

Asia Pacific

The recovery in equities through the first part of the week faltered Thursday as Chinese tech stocks resumed their selloff.

Renewed weakness in tech stocks and a selloff in banks and property shares hurt Chinese markets. The CSI 300 declined 2.0 percent, while the Shanghai composite and Hong Kong's Hang Seng both lost 1.1 percent. Warnings from large tech firms over the impact of China's regulatory crackdown weighed on risk appetite.

Among companies in focus, China Evergrande Group, the troubled real estate developer, lost 7.2 percent and its China Evergrande New Energy Vehicle Group dropped 19 percent in Hong Kong trading after revealing the electric vehicle unit suffered heavy losses in the first half of 2021. Hong Kong's health care/biotech and internet sectors lagged. Kuaishou, the video streaming leader, fell 9.2 percent after an earnings miss and weak guidance, citing the regulatory clampdown.

A Bank of Korea rate rise depressed South Korea, with the KOSPI down 0.6 percent, with big tech and pharma stocks leading the decline. The BOK became the first major Asian central bank to raise rates since the pandemic began. Separately, Taiwan's benchmark Taiex recovered early declines to end up 0.1 percent, with support from Taiwan Semiconductor, up 1.5 percent after raising its chip prices.

Japanese stocks were narrowly mixed in quiet trading, leaving the Nikkei up 0.1 percent and the broader Topix flat. A better showing on Wall Street Wednesday provided support while expanded emergency measures to fight the coronavirus weighed on sentiment. Investors were cautious ahead of the appearance of Fed Chair Jerome Powell scheduled on Friday. Airlines, railways, and banks outperformed while shipping, chemicals, and pulp & paper stocks lagged.

Australia saw weakness across most sectors to push the All Ordinaries index down 0.5 percent, with tech and metals lagging. Investors reacted poorly as Covid case counts continued to rise in key cities, despite widespread restrictions. Qantas, the airline, was a bright spot, up 3.5 percent, after reporting a smaller than expected loss and saying it expects to resume international flights by year end.

Looking ahead*

In Asia/Pacific, Chinese industrial profits figures are due. In Europe, the Italian business and consumer confidence report is scheduled. In North America, the big event is Fed Chair Jerome Powell will speak at 10 am ET, plus US international trade in goods, US personal income and outlays, US retail and wholesale inventories, and US consumer sentiment reports are on tap.

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