Daily market review

United States

Equities edged up on a batch of better economic data and a Federal Reserve policy announcement that matched expectations, with Fed Chair Jerome Powell again pushing back on pressure for nearer-term rate increases. The Dow Jones industrial average rose 0.3 percent, the S&P 500 rose 0.7 percent, and the NASDAQ gained 1.0 percent, to set new record highs.

Risk assets reacted calmly and positively after the Fed announced a gradual tapering of its bond purchases while saying the economy remains far from meeting requirements for policy-makers even to consider raising rates.

In economic data, ISM's services index surged to a record high of 66.7 in October from 61.9 in September. The index came in well above Econoday's consensus forecast for 61.9. Separately, at 571,000, ADP's October estimate for private payroll growth was higher than Econoday's consensus for 400,000 and near the top of the consensus range.

Among stock sectors, materials and consumer discretionary stocks fared best. Among consumer discretionary, Bed Bath & Beyond jumped 15 percent after unveiling a collaboration with Kroger, the grocery chain, which rose 5.6 percent, and announcing it would accelerate its share repurchases. Fortescue, the miner, rose 2.3 percent after an earnings beat.

Lagging were industrials, tech, and health care. Energy stocks were hurt by a sharp move lower in oil prices after another uptick in US oil inventories. Industrials were hurt by a selloff in Deere, down 3.5 percent, after its workers rejected management's latest pay offer.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil dropped US$3.29 to US$81.23 while spot gold declined US$15.19 to US$1,772.63. The US dollar fell against most major currencies but rose vs. the yen. Yields on the US Treasury 30-year bond rose 6 basis points to 2.02 percent, and the 10-year note rose 4 basis points at 1.59 percent.


Equities edged up with a boost from miners as commodities prices ticked up. The Europe-wide STOXX 600 firmed 0.3 percent, the German DAX was flat, the French CAC rose 0.3 percent, and the UK FTSE 100 eased 0.4 percent.

Among sectors, best were basic resources, technology, food & beverage, industrials, media, and real estate. Lagging were oil & gas, retail, utilities, autos & parts, and travel & leisure. Falling oil prices weighed on energy stocks, with Royal Dutch Shell off 2.0 percent.

Among companies in focus, Lufthansa jumped 6.4 percent after topping profits expectations and saying bookings have recovered to pre-pandemic levels. Raiffeisen Bank, the Austrian lender, jumped 11 percent, and ProgressWerk, the German auto parts supplier, rose 12 percent, on earnings beats. BMW gained 1.2 percent on upbeat quarterly results.

On the downside, Next, the UK retailer, fell 3.3 percent after weaker guidance. Orsted, the Danish wind power company, slipped 3.6 percent on lack of wind and lower profits. Zalando, the German online retailer, fell 9.1 percent on a disappointing profits figure and warning on supply disruptions.

Asia Pacific

Asian equities were mixed to weaker with China softer but Australia rebounding. Trading was muted by a holiday in Japan and caution before the Fed policy announcement.

Chinese equities edged down amid concern over China's Covid outbreak and downbeat comments on the economic outlook from Chinese Premier Li Keqiang. China's CSI 300 index slipped 0.4 percent and the Shanghai composite eased by 0.2 percent. In Shanghai trading, consumer staples and industrials lagged while real estate and utilities held up better. Hong Kong's Hang Seng index declined 0.3 percent with oil & gas and consumer goods off while property stocks outperformed.

Separately, South Korea's KOSPI dropped 1.3 percent in thin trading, paced by losses in tech giants. Taiwan's Taiex benchmark was up 0.3 percent.

Australian equities recovered the previous day's losses with the All Ordinaries index up 0.9 percent. Investors generally focused on dovish takeaways from the Reserve Bank of Australia's policy statement, with the view that any rate increase remains far off. Gains were nearly across the board. Rising iron ore prices lifted miners while big banks rebounded to boost financials. Consumer staples, biotech, and industrials also outperformed. Tech was the only sector to see losses.

Looking ahead*

In Asia/Pacific, Japanese PMI composite final and Australian goods & services trade reports are scheduled. In Europe, the Bank of England policy announcement and monetary policy report is due, plus the following reports: German manufacturers' orders, Swiss SECO consumer climate, French PMI composite final, German PMI composite final, Eurozone composite final, Eurozone PPI, and UK PMI construction. In North America, US international trade in goods & services, US jobless claims, US productivity & costs, and Canadian merchandise trade reports are on tap.

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