Daily market review

United States

Investors bid up risk assets and bond yields declined Friday after Federal Reserve Chair Jerome Powell relieved the market's worries that he agreed with other policy-makers who have been agitating for the Fed to taper its emergency asset purchases as soon as the fall.

Powell said the economy has made substantial progress toward the Fed's inflation goals, but he said he wants to see more progress toward the Fed's employment goals. While the job picture has "brightened considerably," and while "the prospects are good for continued progress toward maximum employment," Powell said there is "considerable remaining ground to reach maximum employment."

The Dow Jones industrial average rose 0.7 percent, the S&P 500 gained 0.9 percent and the NASDAQ advanced by 1.2 percent. Most sectors rose, with value/cyclicals leading the way. Energy, materials, and technology outperformed, while defensive sectors including consumer staples lagged.

Energy stocks fared best with drillers and oil services leading as oil prices rose. Materials were bolstered by a rebound in metals prices and advances in chemicals stocks. Facebook, up 2.3 percent, and Netflix, up 1.6 percent, paced communications services. Financials and industrials outperformed too.

On the downside, consumer discretionary and consumer staples lagged, along with health care. Moderna, the vaccine maker, was a notable loser, down 4.5 percent, as regulators looked into allegations of contamination of its vaccines.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.03 to US$72.61 while spot gold rose US$26.36 to US$1,818.84. The US dollar fell vs. most major currencies. The US Treasury 30-year bond yield was down 4 basis points at 1.91 percent and the 10-year note yield fell 5 basis points to 1.31 percent.


Equities recovered from a weak start to end higher Friday, with commodities leading, against a backdrop of monetary policy support. The Europe-wide STOXX 600 and the German DAX both rose 0.4 percent, the French CAC gained 0.2 percent, and the UK FTSE 100 was up 0.3 percent.

Cyclical stocks were bolstered by expectations for easing from the People's Bank of China, and status quo comments from Fed Chair Powell, which investors interpreted to mean the Fed is in no rush to start scaling back its asset purchases.

Miners outperformed, along with real estate, technology, oil & gas, and industrials. Lagging were utilities, retail, travel & leisure, personal & household goods, health care, and insurance.

Among big miners, Anglo American rose 3.0 percent and BHP rose 2.2 percent, with a boost from higher industrial metals prices, and a better showing in Chinese equities markets.

Among companies reporting, Steinhof, the retailer, rose 2.2 percent, and Amigo, the UK lender, rose 4.2 percent after positive quarterly results.

Asia Pacific

Asian equities markets were mixed Friday with an upward bias for greater China on rising expectations for Chinese monetary policy easing. Trading was tentative ahead of Fed Chair Jerome Powell's appearance due in the US morning.

Chinese markets were split with growth stocks lagging value. The CSI 300 rose 0.5 percent, the Shanghai composite gained 0.6 percent, and Hong Kong's Hang Seng was flat. Risk appetite drew support from another big injection of reserves by the People's Bank of China, which added to speculation that PBOC will cut bank required reserves to spur lending.

On the negative side, sentiment remained constrained by China's ongoing regulatory crackdown on big internet-oriented firms. Alibaba dropped 3.9 percent in Hong Kong trading as investors eyed pending rule changes to limit the firm's automated use of user data to boost vendor sales on its platform.

South Korea markets held slim ranges, with the KOSPI ending up 0.2 percent, as the market awaited the Powell appearance. Separately, Taiwan's benchmark Taiex gained 0.8 percent, with tech stocks rising in the wake of price increases announced by Taiwan Semiconductor Manufacturing Company (TSMC), the chip manufacturing giant, which also rose 0.8 percent.

Japanese stocks tracked US markets lower, leaving the Nikkei down 0.4 percent and the broader Topix down 0.3 percent. Most sectors declined, with land transportation, warehouses, precision instruments lagging most, along with banks and autos. Semiconductors outperformed, with Tokyo Electron up 0.9 percent, after Taiwanese chip maker TSMC extended its gains after announcing price increases this week.

Australia held slim ranges in choppy trading with the All Ordinaries index down 0.1 percent. Bearish guidance depressed tech and retail stocks, while miners weakened with mostly lower metals prices. Industrials outperformed with support from airlines and other transports. Among companies in focus, Wesfarmers, the retail and industrial conglomerate, fell 2.8 percent after warning of poor business conditions. On the positive side, CSL, the biotech, rose 1.0 percent to boost health care.

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