Daily market review

United States

Growth stocks saw profit-taking pressure after their recent gains while value stocks and defensive sectors outperformed. The Dow Jones industrial average and the S&P 500 both rose 0.4 percent and the NASDAQ eased by 0.1 percent.

Favorable quarterly earnings kept most sectors in positive territory. Defensives held up best, including utilities, health care, and real estate. In health care, Abbott Labs rose 3.3 percent on a very strong quarter as its Covid test was in demand.

Information technology and communications lagged. Netflix lost 2.2 percent despite an earnings beat, as the stock has rallied lately, and Google slipped 1.0 percent as it gave back some of its recent advance. Weakness in Amazon, down 0.8 percent, held back consumer discretionary. ASML, the chip equipment maker, dropped 4.2 percent after cutting its guidance on supply shortages.

Among other companies in focus, Novovax, the pharma, dropped 15 percent after a report it is having trouble manufacturing its vaccine. WD-40, the household products maker, fell 9 percent on an earnings miss. On the plus side, Ford rose 4.0 percent after an analyst upgrade. Canadian National Railway rose 5.2 percent and Verizon gained 2.4 percent after earnings beats.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 78 cents to US$85.73 while spot gold rose US$15.19 to US$1,785.49. The US dollar declined vs. major currencies. Yields on the US Treasury 30-year bond rose 4 basis points to 2.13 percent, and the 10-year note rose 1 basis point to 1.65 percent.


Equities were mixed with earnings in focus, and food & beverage stocks stronger after upbeat Nestle earnings. The Europe-wide STOXX 600 rose 0.3 percent, the German DAX firmed 0.1 percent, the French CAC gained 0.5 percent, and the UK FTSE 100 was up 0.1 percent.

In macro news, UK inflation figures surprised to the downside, which suggested the Bank of England might not boost interest rates as soon as the market anticipates. Meanwhile UK Covid-19 infection rates continued to surprise on the upside, which raised pressure on the government to reintroduce restrictions aimed at limiting the pandemic.

Among sectors, utilities, oil & gas, personal & household, construction & materials, health care, and telecom outperformed while lagging were technology, travel & leisure, basic resources, autos & parts, retail, and real estate.

Among companies in focus, Nestle rose 2.7 percent and Husqvarna, the outdoor tool maker, rose 8.4 percent on earnings beats. On the downside, Roche, the pharma, fell 1.6 percent after the market disliked its quarterly results, and H&M, the retailer, fell 2.0 percent after an analyst downgrade.

In economic news, UK consumer prices were marginally softer than expected in September. A 0.3 percent monthly increase was a tick less than the market consensus and small enough to trim the annual inflation rate from 3.2 percent to 3.1 percent.

Asia Pacific

Asian equities ended mixed with China and Japanese markets giving back early gains as commodities prices fell back and worries rose again over pending China Evergrande debt payments.

A retreat in oil prices hurt energy stocks and coal miners fell back after reports that Chinese regulators plan to intervene to address rising coal prices. Property stocks weakened again on news of a decline in Chinese property prices. Markets are eyeing the Oct. 23 deadline for China Evergrande to default formally on coupon payments that were due on Sept. 23. China's CSI 300 index ended down 0.3 percent and the Shanghai composite was off 0.2 percent.

Hong Kong's Hang Seng index gained 1.4 percent, with a boost from internet and tech stocks. Alibaba gained 6.7 percent after its founder, Jack Ma, reappeared in public after a long absence, and the company unveiled a new server microchip.

South Korea's KOSPI was down 0.5 percent and Taiwan's Taiex benchmark off 0.1 percent, with tech stocks lower on profit-taking following recent gains.

Japanese equities were mixed with reopening plays outperforming as the market eyes further easing in anti-Covid restrictions. The Nikkei 225 index and the broader Topix both firmed 0.1 percent. Stocks ended well down from their early highs under pressure from rising US bond yields. Air and land transportation stocks outperformed, along with banks and securities firms.

Australian equities saw gains nearly across the board with the All Ordinaries up 0.5 percent as the market tracked the positive response to US earnings reports. Rising bond yields propelled banks. Tech rose on strength in buy-now-pay-later stocks. Retailers led consumer discretionary. Commodity-linked stocks lagged on falling coal and iron ore prices.

In economic news, house prices in China's 70 biggest cities fell 0.08 percent on the month in September, the first month-over-month decline in six years, reflecting fallout from the Evergrande affair and the government's steps to curb property speculation. Property prices were up 3.8 percent on the year but the pace of increase decelerated from 4.2 percent in August, marking the fourth consecutive monthly slowdown in the year-over-year growth rate.

Looking ahead*

In Asia/Pacific, no major data reports are scheduled. In Europe, UK public sector finances, French business climate indicator, Eurozone EC consumer confidence, and UK CBI industrial trends figures are due. In North America, US jobless claims, US Philadelphia Fed manufacturing, US existing home sales and US leading indicators figures are on tap.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies