Daily market review

United States

Equities ended mostly lower Thursday with value/cyclicals lagging growth in a reversal of the recent pattern, but big growth stocks faltered into the close. The Dow Jones industrial average fell 1.6 percent, the S&P 500 declined 1.2 percent, and the NASDAQ was off 0.4 percent.

Value stocks slipped amid uncertainty over the economic outlook fanned by softer economic data and corporate updates focusing on cost pressures and supply disruptions. Investors took note of an unexpected uptick in US jobless claims that fed concern about a slowing in the employment market.

Among sectors, worst were industrials, consumer staples, and financials, while best were communications services, technology, and utilities.

Among companies in focus, Bed Bath & Beyond dropped 22 percent after a big earnings miss on supply chain trouble. Carmax, the auto seller, fell 13 percent on an earnings miss. Herman Miller, the furniture maker, fell 6 percent after citing rising cost pressures. McCormick, the spice leader, fell 3.2 percent after lowering its guidance on inflation worries.

In US economic news, new jobless claims rose 11,000 to 362,000 in the week ended September 25. The increase was above market expectations. This is the third week in a row for higher claims for regular unemployment benefits.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 8 cents to US$78.52 while spot gold rose US$30.77 to US$1,755.99. The US dollar fell vs. most major currencies. The US Treasury 30-year bond yield rose 2 basis points to 2.09 percent and the 10-year note yield slipped by 1 basis point to 1.52 percent.


Equities were flat to weaker at month end, with risk appetite undercut by rising energy costs and weaker Asian economic data. Defensive stock sectors fared best. The Europe-wide STOXX 600 eased 0.1 percent, the German DAX declined 0.7 percent, the French CAC declined 0.6 percent, and the UK FTSE 100 was off 0.3 percent.

Weaker-than-expected Chinese and Japanese economic reports fanned concerns about a global slowdown, alongside ongoing supply chain disruptions linked to the pandemic. The energy crunch in China and Europe continued to attract attention, with utilities hurt by concern about rising fuel costs, and industrials hurt by concern about power outages and other disruptions. An uptick in European bond yields reflected focus on inflation worries with commodity prices rising.

Strength in commodities-linked stocks on rising commodities prices helped basic resources and oil & gas stocks outperform. Other winners included financial services, health care, consumer staples and media. Lagging were travel & leisure, utilities, retail, personal & household goods, autos & parts, and real estate.

Asia Pacific

Asian markets were mixed with China mostly better on a recovery in growth stocks but Japan undercut by slowing economic performance and slowing in value stocks across much of the region.

Weighing on regional markets were unexpectedly weak Chinese and Japanese economic reports along with another day of worries over the Chinese power crunch and uncertainty over China Evergrande's missed debt payments and the country's property markets.

Mainland Chinese markets mostly improved with tech-heavy growth stocks outperforming. China's CSI 300 gained 0.7 percent and the Shanghai composite rose 0.9 percent. Hong Kong lagged mainland China with the Hang Seng down 0.4 percent. Big tech stocks were hit by concern over proposed rules limiting use of algorithms by online sales platforms, including Alibaba, down 4.1 percent. Meanwhile, Taiwan's Taiex index rose 0.5 percent and South Korea's KOSPI gained 0.3 percent, with tech stocks leading.

Worries over slowing regional growth hurt Japanese equities, with the Nikkei 225 index off 0.3 percent and the broader Topix down 0.4 percent. Reaction to news of Fumio Kishida's victory in the LDP leadership election drew a muted reaction as he was seen as a somewhat dull choice. Many market participants were hoping for a new prime minister more likely to pursue aggressive reforms. Expectations remain for a better handling of the pandemic.

Australian equities rallied, paced by an uptick in iron ore prices, with the All Ordinaries index up 1.7 percent. Gains were across the board, with materials and consumer staples leading, along with health care, financials, energy, and industrials. Defensive sectors lagged but were still higher.

In economic news, official Chinese PMI survey data suggest that growth in the manufacturing sector stalled in September. The CFLP manufacturing PMI fell for the sixth consecutive month from 50.1 in August to 49.6 in September, its lowest level since February 2020 during the initial impact of the Covid-19 pandemic.

Separately, Japan's industrial production posted an unexpectedly large decline in August as pandemic lockdowns in Southeast Asia are straining supplies further and semiconductor shortages linger, the Ministry of Economy, Trade and Industry reported.

Looking ahead*

In Asia/Pacific, the following are due for release: Japanese unemployment, Japanese Tankan survey, South Korean external trade, South Korean PMI manufacturing, Indian PMI manufacturing, and Japanese PMI manufacturing final. In Europe, reports are scheduled on German retail sales, Swiss SVME PMI, plus PMI manufacturing final reports from France, Germany, Eurozone, and UK, and the Eurozone HICP flash. In North America, Canadian monthly GDP, personal income and spending, US PMI manufacturing final, US ISM manufacturing, US consumer spending, and US consumer sentiment reports are on tap.

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Global Bond Market Recap

Global Currency Recap

Commodities and currencies