Daily market review

US rises on bargain hunting; Europe off on Omicron fears; Asia mixed to down

United States

Renewed dip-buying in value/cyclicals propelled equities again, paced by a recovery in energy, financials, and industrials. The Dow Jones industrial average rose 1.8 percent, the S&P 500 gained 1.4 percent, and the NASDAQ gained 0.8 percent.

Worries about Omicron diminished for the moment as investors noted the handful of cases identified so far were relatively mild, and as pharma companies downplayed concern that existing vaccines would prove ineffective. A Pfizer executive said the firm does not expect a drop in its vaccine's effectiveness with Omicron.

Bargain-hunting in airlines lifted industrials, including American, up 7 percent. Meanwhile, Boeing rose 7.5 percent on a report that Chinese authorities may soon allow the 737 MAX aircraft to resume flights. Energy stocks tracked rising oil prices. Financials rebounded too, with Wells Fargo up 3.6 percent.

Among companies in focus, Kroger, the grocery chain, rose 11 percent after an earnings and revenues beat. Snowflake, the cloud computing data company, rose 16 percent on strong earnings and guidance.

On the downside, Apple declined 0.6 percent on a report the firm told its suppliers that demand for the iPhone 13 was lower than expected. Microsoft declined 0.2 percent and Facebook/Meta was off 0.1 percent. Among retailers, Lands' End fell 9.9 percent after a revenues miss and warning on supply chain trouble. Dollar General declined 3.1 percent after disappointing guidance.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.44 to US$70.14 while spot gold fell US$9.48 to US$1,768.60. The US dollar was mixed vs. major currencies. Yield on the US Treasury 30-year bond was unchanged at 1.76 percent, and the 10-year note rose 3 basis points to 1.44 percent.

Europe

Pandemic fears undercut equities, along with expectations for more restrictions on movement. The Europe-wide STOXX 600 fell 1.2 percent, the French CAC slipped 1.3 percent, the German DAX lost 1.4 percent, and the UK FTSE 100 was off 0.6 percent.

Among sectors, travel & leisure was hit hard by Covid worries, while tech sold off on a report saying Apple planned to scale back orders in response to weaker demand for iPhones. Apple suppliers STMicroelectronics fell 6.7 percent and Infineon lost 1.9 percent. Among other lagging sectors were utilities, real estate, and telecom. Holding up best were food & beverage, oil & gas, banks, construction, and industrials.

Among stocks in focus, Vifor Pharma rallied 21 percent on a report CSL, the Australian biotech, was in talks to acquire Vifor. Serco, the government services contractor, rose 1.2 percent on better guidance.

Asia Pacific

Equities were mixed but mostly lower on worries about the Omicron variant and hawkish comments from Federal Reserve officials which appeared to solidify market expectations for the Fed to raise rates starting in June.

Among Fed comments, Cleveland Fed President Loretta Mester told Bloomberg late Wednesday she saw the argument for a faster taper some time ago. Tech, biotech, and materials were among the worst performers while utilities and consumer discretionary outperformed.

Mainland Chinese markets were narrowly mixed with China's CSI 300 index up 0.3 percent and the Shanghai composite index off 0.1 percent. Most sectors were higher, led by materials, energy, real estate, and financials, while telecom and health care slipped.

Strength in financials bolstered Hong Kong equities, with the Hang Seng index up 0.6 percent. Losses in tech stocks limited the gains. South Korea's KOSPI rose 1.6 percent to outperform the region, paced by consumer stocks and industrials. Taiwan's Taiex gained 0.8 percent.

Japanese markets fell with cyclicals and reopening names leading the declines after Japan confirmed its second Omicron case. The Nikkei 225 slipped 0.7 percent and the Topix lost 0.5 percent. Worst were autos, mining, and air transportation, with airlines hit by new travel restrictions.

Australia's All Ordinaries index declined 0.3 percent with weakness centered in growth/tech/materials stocks on pandemic fears.

Looking ahead*

In Asia/Pacific, the following reports are due: Hong Kong PMI, Japanese PMI composite final, Singapore PMI, Chinese PMI composite and Indian PMI composite. In Europe, French industrial production, French PMI composite final, German PMI composite final, Eurozone PMI composite final, UK PMI composite final, and Eurozone retail sales reports are due. In North America, US employment, US PMI composite final, US factory orders, and US ISM services reports are on tap.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

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