Daily market review

United States

Equities ended narrowly mixed Wednesday with bargain-hunting providing an early lift after Tuesday's big selloff but the major indexes faltered into the close. The Dow Jones industrial average rose 0.3 percent, the S&P 500 rose 0.2 percent and the NASDAQ declined 0.2 percent.

Uncertainty over congressional action on raising the federal debt ceiling and prospects for a government shutdown later this week dampened market sentiment. Inflation and supply chain worries remained consistent themes in corporate updates. On the positive side, comments from an army of central bankers effectively left intact expectations for a very slow Federal Reserve taper and plenty of global monetary accommodation in the meantime.

Among sectors, defensive plays including utilities fared best along with consumer staples and pharma. Consumer discretionary stocks also outperformed, with support from autos, retail, and homebuilders. Strength in Netflix, up 2.6 percent, boosted communications services. Energy stocks were mixed after oil prices turned lower.

On the downside, industrials lagged, and weakness in semiconductors depressed technology after chipmaker Micron, down 2.0 percent, issued weak guidance. Financials lagged, along with materials, as metals miners sold off.

Among companies in focus, Dollar Tree, the budget retailer, rallied by 16 percent after announcing a big share buyback. Netflix rose following upbeat programming results. Boeing rose 3.2 percent after an upgrade at Bernstein. On the downside, HP fell 4.4 percent after a downgrade at JP Morgan. Generac, the generator maker, lost 4.5 percent after issuing disappointing guidance.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil eased 9 cents to US$78.44 while spot gold fell US$8.02 to US$1,725.22. The US dollar rose vs. major currencies. The US Treasury 30-year bond yield declined 1 basis point to 2.08 percent and the 10-year note yield slipped by 1 basis point to 1.53 percent.


Equities recovered after a bout of weakness overnight, with a boost from company news. The Europe-wide STOXX 600 rose 0.6 percent, the German DAX rose 0.8 percent, the French CAC gained 0.8 percent and the UK FTSE 100 gained 1.1 percent.

AstraZeneca, the UK pharma, rose 1.6 percent to boost health care stocks after saying it will acquire the rest of Caelum Biosciences, a specialist in rare diseases. Renault, the automaker, rose 1.4 percent to lead the sector higher.

UK retailer Next Plc rose 2.8 percent after raising its profits guidance. Air Partner, the UK aviation services business, rose 4.4 percent as it sees recovering demand for private jets post-pandemic. On the downside, SSP Group, the UK food services business, fell 5.8 percent on pandemic effects. Heidelberg Cement fell 1.2 percent on news it will acquire Command Alkon, the US construction software firm.

Among sectors, best were autos & parts, banks, health care, retail, personal & household goods, insurance, food & beverage, and media. Lagging were tech, real estate, utilities, travel & leisure, construction & materials, and oil & gas.

Asia Pacific

The overnight risk-off move continued in Asian markets with growth/tech stocks down in response to rising bond yields, but the selloff spread to value/cyclical sectors and a commodities selloff hit Australia.

Chinese markets were hurt by power disruptions and expectations that businesses will face electricity price increases. The country is scrambling to boost short coal supplies that account for the bulk of its power generation. China's CSI 300 declined 1.0 percent and the Shanghai composite dropped 1.8 percent.

Hong Kong outperformed mainland China with the Hang Seng up 0.7 percent, with support from a better showing for property stocks including China Evergrande, up 15 percent. Uncertainty remained over upcoming coupon payments from the struggling developer, and an array of reports suggested China was pressing state-owned firms to buy up Evergrande assets. Meanwhile, tech stock weakness, notably in semiconductors pushed down Taiwan's Taiex index by1.9 percent and South Korea's KOSPI by 1.2 percent.

The selloff on Wall Street hit Japanese equities, with losses across the board and the Nikkei 225 index and the broader Topix both down 2.1 percent. Growth lagged value slightly as big tech shares were notable decliners, including chipmaker Tokyo Electron, down 5.3 percent.

Among sectors, worst were precision instruments, appliances, and banks, followed by industrials, financials, and pharma. Travel stocks were a bright spot after news Japan would gradually lift anti-Covid-19 restrictions on movement. Uncertainty as the market awaited results in the ruling Liberal Democratic Party's leadership election added to the risk-off tone.

Australian equities suffered from the global risk-off move, with the All Ordinaries index down 1.1 percent. High-growth tech and health care stocks lagged, along with energy as oil prices retreated. Banks lagged despite rising interest rates. Materials were mixed with iron lower and precious metals better. Utilities outperformed on M&A news.

Looking ahead*

In Asia/Pacific, the following are due for release: South Korean industrial production, South Korea retail sales, Japanese industrial production, Japanese retail sales, Chinese CFLP PMI manufacturing, and Chinese PMI manufacturing. In Europe, UK GDP, French consumer manufactured goods consumption, French CPI and PPI, Swiss KOF leading indicator, German unemployment rate, Eurozone unemployment rate, Italian CPI, and German CPI reports are scheduled. In North America, US GDP, US jobless claims, and Chicago PMI reports are on tap.

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