Daily market review

United States

Equities ended mixed Friday with growth stocks lagging as long-term yields continued to rise, while value/cyclicals recovered from early weakness with financials and energy leading. The Dow Jones industrial average firmed 0.1 percent, the S&P 500 rose 0.2 percent, and the NASDAQ was flat.

Tech, biotech, and other highly valued growth sectors saw profit-taking at week's end as long-term bond yields rose again, but many growth favorites ended well up from their morning lows. Nvidia, the chipmaker, slipped 1.8 percent, Amgen, the biotech, declined 0.7 percent. and Microsoft declined 0.1 percent. On the positive side, the steepening yield curve boosted financials, while energy stocks rose as oil prices extended their recent gains, with Brent crude up another 1 percent on the day.

Among companies in focus, Nike, the sportswear giant, slipped 6.2 percent after missing on sales forecasts and cutting its guidance due to factory shutdowns in Southeast Asia. Foot Locker, the sports shoe retailer, fell 7.2 percent.

Crypto-linked stocks suffered after China outlawed cryptocurrency transactions, effectively banning bitcoin and other cryptocurrencies. Coinbase, the crypto exchange, fell 2.4 percent, and Grayscale Bitcoin Trust lost 4.6 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 90 cents to US$78.08 while spot gold fell US$1.12 to US$1,1746.65. The US dollar rose vs. major currencies. The US Treasury 30-year bond yield rose 4 basis points at 1.98 percent and the 10-year note yield rose 2 basis points to 1.45 percent.


China Evergrande fears and soft German economic data undercut equities Friday. The Europe-wide STOXX 600 fell 0.9 percent, the German DAX lost 0.7 percent, the French CAC fell 1.0 percent, and the UK FTSE-100 eased 0.4 percent.

Renewed weakness in Chinese markets and worries over the China Evergrande affair weighed on sentiment. Uncertainty over the outcome of German national elections scheduled Sunday added to caution headed into the weekend. Finally, a weak German Ifo business sentiment report hurt cyclicals as it pointed to continuing ill effects of supply chain disruptions on business activity.

Among sectors, weakest were retail, technology, real estate, industrials, financial services, and personal & household goods. Holding up best were autos & parts, banks, insurance, oil & gas, and travel & leisure. Among companies, luxury retailers suffered from concern over Chinese demand, with LVMH down 1.7 percent and Kering off 3.0 percent. Nike, the sportswear leader, fell 6.0 percent after lowering its guidance and warning of supply disruptions due to the pandemic.

In German economic news, September's Ifo survey found overall economic sentiment deteriorating for a third month in a row. The headline climate indicator dipped from an upwardly revised 99.6 in August to 98.8, just on the soft side of the market consensus and a five-month low. It now stands only 2.7 points above its pre-pandemic level in February last year.

Asia Pacific

Asian equities were mixed Friday with Japan rising but China retreating after Thursday's bounce amid uncertainty over China Evergrande's huge off-shore debt payment, which was due on Thursday.

China's CSI 300 declined 0.1 percent and the Shanghai composite lost 0.8 percent, while the Hong Kong Hang Seng fell 1.3 percent. Property stocks retreated with China Evergrande off 12 percent. Commodity-based stocks sold off while consumer staples gained after the Chinese government promised to support consumption and restrain rising commodities prices.

The South Korean KOSPI eased 0.1 percent, with risk appetite hurt by concern over Chinese markets. Separately, the Taiwan Taiex rose 1.1 percent, with a boost from Taiwan Semiconductor, up 1.7 percent.

Japan's markets bounced back on their return from a holiday, with support from an as-expected outcome in the Federal Reserve policy announcement and a strong showing on Wall Street. The Nikkei 225 jumped by 2.1 percent and the broader Topix advanced by 2.3 percent, with gains across the board. Value stock beat growth, with shipping leading the winners.

Australian markets retreated on a selloff in precious metals and with consumer discretionary shares and REITS hurt by concern over delayed reopenings in Queensland and New South Wales. Australia's All Ordinaries declined 0.4 percent. On the positive side, energy shares rose on strength in liquefied natural gas and big banks led financials higher with yields up after the Fed policy announcement.

India's BSE Sensex rose 0.3 percent to end above 60,000, with support from signs of better economic activity as new Covid-19 cases slow. The Nifty was up 0.2 percent.

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