Daily market review

United States

Cyclical/value stocks outperformed while growth stocks lagged Monday, leaving the equity market mixed. Weakness in megacaps weighed on the major averages but dip-buying limited the declines. The Dow Jones industrial average rose 0.2 percent, the S&P 500 declined 0.3 percent, and the NASDAQ dipped 0.5 percent.

Rising oil and commodities prices boosted energy and materials stocks. Banks led financials higher as bond yields rose again as Federal Reserve officials continued to talk up taper prospects. Other winning sectors included industrial metals, chemicals, autos, and travel & leisure. On the downside, rising interest rates provided an excuse to sell highly valued growth megacaps, including Amazon, down 0.6 percent, and Apple, down 1.1 percent. Other lagging sectors included biotech, chipmakers, software and retail.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.32 to US$79.40 while spot gold rose US$3.42 to US$1,750.07. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield rose 2 basis points to 2.00 percent and the 10-year note yield rose 3 basis points to 1.48 percent.

In US economic news, new orders for durable goods were stronger than expected in August, when they rebounded 1.8 percent, while Econoday's consensus had centered on a 0.6 percent increase, with the highest forecast at 1.5 percent. Excluding transportation, however, orders edged up just 0.2 percent, half the anticipated rate of 0.4 percent. Core capital goods orders rose 0.5 percent, more than the 0.2 percent expectation.


Equities were narrowly mixed Monday with banks and energy outperforming while tech and health care lagged. The Europe-wide STOXX 600 eased 0.2 percent, the German DAX rose 0.3 percent, the French CAC firmed 0.2 percent and the UK FTSE 100 was also up 0.2 percent.

Bank stocks got a lift from analyst commentary downplaying concern over the impact of China Evergrande's troubles and as bond yields rose. Rising oil prices boosted energy stocks as oil prices extended their recent advance. Reaction was muted to uncertain results in German national elections. Uncertainty over China Evergrande's missed debt payment kept markets in cautious mode.

Asia Pacific

Asian equities were mixed Monday with Chinese markets mixed but under pressure from power outages and worries over the China Evergrande.

China's CSI 300 rose 0.6 percent but the Shanghai composite fell 0.8 percent. Uncertainty over China Evergrande hung over Chinese markets. Markets also reacted badly to news that Sunac China Holdings, the developer, asked for government support to cope with its financial trouble.

Sentiment also suffered from rising concern that China's economy will be hurt by spreading power outages. Energy stocks outperformed with CNOOC up 5.7 percent on news it will issue shares to fund new oil projects. Crypto-linked stocks were hit by China's widening ban on crypto activity.

Hong Kong was mixed with the Hang Seng up 0.1 percent. Industrial stocks lagged in reaction to Chinese power shortages while energy and consumer sectors managed gains.

Meanwhile, Taiwan's Taiex index and South Korea's KOSPI both rose 0.3 percent.

Japanese equities started the day better on expectations for an easing in anti-Covid restrictions but spillover from the array of worries hurting Chinese markets dampened sentiment. The Nikkei 225 index was unchanged and the broader Topix declined 0.1 percent.

Sectors were divided with strength in mining, airlines, banks and autos while marine transportation stocks lagged. Nissan gained 1.4 percent on news it will work with other automakers on standardizing electrical vehicle designs to cut costs.

The reopening trade lifted Australian equities, with the All Ordinaries index up 0.5 percent. Travel, airlines, retailers and energy stocks led the winners after New South Wales officials spelled out plans for reopening. Rising oil and liquefied natural gas prices boosted energy stocks.

Looking ahead*

In Asia/Pacific, the following reports are due for release: Chinese industrial profits, Australian retail sales, Hong Kong merchandise trade, and BOJ minutes. In Europe, the German Gfk consumer climate report is scheduled. In North America, US international trade, US retail inventories, US wholesale inventories, US Case-Shiller home prices, US FHFA house price index, US consumer confidence, and US Richmond Fed manufacturing index reports are on tap.

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