Daily market review

United States

Investors swung back to cyclical/value stocks Thursday after favoring growth and megacap internet stocks on Wednesday. Energy and industrials outperformed while megacaps lagged. The Dow Jones industrial average rose 0.4 percent, the S&P 500 gained 0.3 percent and the NASDAQ firmed 0.1 percent.

News of another decline in US jobless claims to a fresh pandemic low gave cyclicals a modest boost as it bolstered the recovery narrative, although market interest rates edged down on the day. Trading was cautious ahead of US jobs figures due on Friday.

Oil prices and energy stocks rose on news that major oil producers would retain current production plans, despite US pressure to boost output more quickly. Occidental Petroleum, the oil explorer, gained 6.0 percent, and Haliburton, the oil servicer, rose 3.9 percent.

Industrials outperformed on strength in transports and machinery, with UPS up 0.9 percent, and Boeing up 1.2 percent. Lagging were megacap tech and communications services, including Microsoft, down 0.2 percent, Facebook, down 1.8 percent, and Google, down 1.3 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.49 to US$72.77 while spot gold fell US$3.74 to US$1,810.34. The US dollar was down vs. major currencies. The US Treasury 30-year bond yield declined 2 basis points at 1.89 percent and the 10-year note yield declined 1 basis point to 1.28 percent.

In US economic news, jobless claims continued to trend lower in positive confirmation of recovery in the labor market. Initial claims fell 14,000 in the August 28 week to a 340,000 level that is the lowest of the pandemic and at the very bottom of Econoday's consensus range.


Rising oil prices and a rebound in travel & leisure shares helped major equities indexes edge up Thursday. The Europe-wide STOXX 600 firmed 0.3 percent, the German DAX and the French CAC both rose 0.1 percent and the UK FTSE-100 rose 0.2 percent.

Activity was limited ahead of US jobs figures due Friday, which investors view as key to the outlook for Federal Reserve policy. Markets are also anticipating the European Central Bank policy meeting on Sept. 9 amid speculation that the ECB will signal plans to wind down its asset purchases.

Oil prices and energy stocks rose on news that major oil producers would maintain relatively restrained production plans. Travel & leisure shares, meanwhile, saw bargain-hunting after recent losses on coronavirus concerns. Health care also outperformed as SOBI, the Swedish pharma, surged 25 percent, after a takeover offer. Real estate and basic resources lagged.

In economic news, Eurozone producer prices came in hot for July, which added to pressure on the ECB to address upside risks to its inflation outlook. PPI rose by 2.3 percent on the month, much stronger than the market consensus and large enough to raise the annual inflation rate from June's unrevised 10.2 percent to 12.1 percent. This followed news that CPI rose by 3 percent in August, well above the ECB's 2% target.

Asia Pacific

Asian equities markets ended mixed Thursday with China rising on hopes for new fiscal and monetary stimulus as economic data confirm a slowdown on coronavirus effects. Japan firmed on carry-over from tech stock gains during the Wall Street session. Risk appetite was limited ahead of US jobs data due Friday.

New Chinese steps to support credit for small business announced Thursday and hopes for broad monetary policy support bolstered Chinese markets. The CSI 300 was unchanged and the Shanghai composite gained 0.8 percent. Value stocks outperformed, led by industrials and energy. Healthcare stocks dropped and IT also lagged.

Hong Kong's Hang Seng gained 0.2 percent with losses in health care and financials offset by a better showing for energy, tech, and internet stocks.

A selloff in tech heavy-weights and financials depressed South Korea ahead of Friday's US jobs report. The KOSPI dropped 1.0 percent. Among companies in focus, KakaoBank fell 7.8 percent on a report that a large investor sold a big stake. Separately, Taiwan's benchmark Taiex fell 0.9 percent, in sympathy with weakness in Korea.

Japanese markets edged up as growth stocks outperformed, with a boost from Wednesday's strong US showing for tech shares. The Nikkei rose 0.3 percent and the broader Topix edged up 0.1 percent. Among sectors, metals, chemicals, and insurance outperformed while railways and airlines lagged.

A selloff in miners on falling commodities prices drove Australian markets lower with the All Ordinaries down 0.4 percent. BHP, the mining heavyweight, fell 5.6 percent, and Newcrest was off 1.5 percent. Health care and utilities also lagged. Energy stocks outperformed, along with information technology.

Looking ahead*

In Asia/Pacific, figures are due on the following: Hong Kong PMI, Japanese PMI composite, Singapore PMI, China PMI composite, and India PMI composite. In Europe, the following are scheduled: PMI composite final reports from Eurozone, France, Germany, and UK, plus Eurozone retail sales. In North America, US employment situation, US PMI composite final, and US ISM services reports are on tap.

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