Daily market review

United States

Value/cyclicals weakened amid concern over slowing demand but upbeat earnings for big growth stocks kept the stock market from a bigger selloff. The Dow Jones industrial average fell 0.7 percent, the S&P 500 lost 0.5 percent, and the NASDAQ was flat.

A drop in long-end US Treasury yields undercut bank stocks while declines in oil, industrial metals, and other commodities prices hit energy and materials stocks but tech stocks got a lift from falling long yields. Industrials suffered, with Waste Management off 2.6 percent after disappointing results. Boeing lost 1.5 percent after an earnings miss. Some analysts argued cyclicals were due for consolidation.

Meanwhile, short end yields rose on speculation the Federal Reserve will raise rates sooner than expected as investors appear spooked by inflation fears. On the positive side, earnings beats at heavily weighted Google, up 5.0 percent, and Microsoft, up 4.2 percent, provided big support for the major averages.

Among Dow stocks, JP Morgan fell 2.1 percent, Dow Chemical fell 4.6 percent, and Walgreen's lost 2.5 percent. Among other notables, Robinhood, the online broker, fell 10.4 percent after reporting slowing retail trading.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined US$1.60 to US$84.14 while spot gold fell US$9.22 to US$1,797.55. The US dollar was mixed vs. major currencies. Yields on the US Treasury 30-year bond fell 9 basis points to 1.95 percent, and the 10-year note was down 8 basis points at 1.54 percent.


Equities edged down on profit-taking pressures in defensive trading before Thursday's European Central Bank policy meeting. The Europe-wide STOXX 600 eased 0.4 percent, the German DAX slipped 0.3 percent, the French CAC declined 0.2 percent, and the UK FTSE 100 was down 0.3 percent.

Cyclicals lagged, with energy, banks, and basic resources off while technology, real estate, and utilities held up best. Tech stocks outperformed on strong quarterly results from US tech leaders released after the US close Tuesday.

Weaker commodities prices undercut oil & gas and natural resources stocks, while metals were off as China's power crunch has limited demand. On the positive side, UK bond yields declined after UK budget plans showed bigger-than-expected cuts in planned debt sales.

Earnings were mixed, with Puma, the sportswear giant, up 3.2 percent on an earnings beat and better guidance, and Sodexho, the food services group, rose 5.4 percent after raising its guidance. On the downside, Deutsche Bank dropped 6.5 percent, Banco Santander declined 3.0 percent, chemicals giant BASF fell 0.3 percent, and Electrolux, the appliance maker, eased 0.2 percent, despite earnings beats.

Asia Pacific

Asian equities were mostly weaker with China lagging again as Chinese tech stocks suffered as US-China tensions rose.

Mainland markets suffered with tech stocks in focus after the US banned China Telecom from operating in the US, and as US-China rhetoric over Taiwan heated up. China's CSI 300 index dropped 1.3 percent and the Shanghai composite lost 1.0 percent. Coal miners also lagged as coal prices fell on more Chinese intervention to control prices. Health care and consumer staples lagged too while alternative energy and environmental protection stocks ticked up.

Hong Kong's Hang Seng index declined 1.6 percent with big tech stocks hurt by US-China disputes, including the Federal Communications Commission ban on China Telecom. Tech giants fell, with Meituan down 5.1 percent and Tencent off 3.0 percent.

Meanwhile, South Korea's KOSPI fell 0.8 percent after two days of gains. Taiwan's Taiex benchmark rose 0.2 percent in quiet trading as activity was limited ahead of earnings news.

Japanese markets recovered early losses to end nearly steady. The Nikkei 225 index was unchanged and the broader Topix was down 0.2 percent. The selloff in Chinese tech stocks weighed on Japanese markets early but expectations for upbeat earnings helped equities recover. Activity was limited by caution ahead of weekend elections, which are expected to show the ruling coalition retaining its majority. Most stock sectors declined, paced by marine shipping, utilities, and airlines. Chemicals, food, and transportation equipment held up best.

Australian equities faded from opening highs with the All Ordinaries index ending flat. Australian consumer price figures on the high side of expectations undercut risk appetite. Sectors came in mixed with health care, financials, and telecom better while materials, consumer staples, and utilities lagged.

In economic news, Australian core CPI picked up markedly in the three months to September. The trimmed mean CPI advanced 0.7 percent on the quarter after rising 0.5 percent previously, with the year-over-year increase picking up from 1.6 percent to 2.1 percent, a six-year high.

Looking ahead*

In Asia/Pacific, Japanese retail sales figures are scheduled and the Bank of Japan will announce its policy decision and quarterly Outlook Report at around midday JST Thursday (2300 EDT Wednesday). In Europe, the European Central Bank policy announcement is the highlight, plus German unemployment, Italian business and consumer confidence, Eurozone EC economic sentiment, Italian PPI, and German CPI reports are due. In North America, reports on US jobless claims, US pending home sales, and Kansas City Fed manufacturing are on tap.

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