Daily market review

US, Europe extend risk-on rally as virus fears ease; Asia better

United States

Growth stocks popped up Tuesday on bargain hunting as risk appetite recovered on hopes that the Omicron variant would not derail the recovery. The Dow Jones industrial average gained 1.4 percent, the S&P 500 gained 2.1 percent, and the NASDAQ jumped by 3.0 percent.

Markets reacted with relief to headlines suggesting progress toward a deal to raise the US debt ceiling, and a two-hour dialogue between President Biden and President Putin appeared to cool tensions over Ukraine. Growth stocks rebounded despite rising bond yields as investors rotated out of US Treasuries for a second day on the revival in risk appetite.

An advance in Apple, up 3.5 percent, along with software and other technology momentum names, helped big tech lead the rally. Other winners included Nvidia, up 8.0 percent, and Salesforce, up 3.2 percent. Energy shares outperformed as crude oil prices advanced as worries over the pandemic faded. Oil servicer Haliburton rose 3.7 percent, and Apache, the driller, gained 4.0 percent. Amazon, up 2.8 percent, and Tesla, up 4.2 percent, lifted consumer discretionary.

Lagging were financials, health care, industrials, and communications services, while consumer staples sagged.

Among shares in focus, AutoZone rose 7.5 percent on a big sales beat, and Bumble, the dating app, surged by 9.7 percent after an upgrade at JP Morgan. On the downside, Comcast fell 5.3 percent after issuing negative guidance, and Merck fell 1.6 percent on an analyst downgrade.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.46 to US$74.88 while spot gold rose US$5.87 to US$1,785.10. The US dollar was mixed vs. major currencies. Yields on the US Treasury 30-year bond rose 3 basis points to 1.80 percent, and the 10-year note rose 4 basis points to 1.49 percent.


Equities extended their recovery Tuesday with a broad recovery in risk appetite pushing risk assets much higher. The Europe-wide STOXX 600 rallied 2.5 percent, the German DAX gained 2.8 percent, the French CAC advanced by 2.9 percent, and the UK FTSE 100 was up 1.5 percent.

Equities got a boost from better than expected Chinese trade data and China's cut in bank reserve requirements, the latter regarded as a signal that Chinese authorities are prepared to do more to support the recovery, including a possible rate cut.

Among sectors, basic materials outperformed as demand worries diminished over the impact of the Omicron variant. Retail stocks got a boost from early reports on holiday sales. Technology stocks got a boost from gains in Apple and its suppliers. Defensive sectors including real estate and utilities lagged.

Among stocks in focus, BASF, the chemicals giant, rose 3.2 percent on an analyst upgrade. Ferguson, the plumbing products maker, rose 5.0 percent and British American Tobacco rose 1.3 percent on better -than-expected trading updates.

Asia Pacific

Equities were mostly better as improved risk appetite on Wall Street continued in Asia on hopes the Omicron variant will prove relatively mild. Value/cyclicals outperformed, with support from Chinese trade data and a cut in Chinese bank reserve requirements.

A better-than-expected showing for Chinese exports and China's 50 basis point cut in the bank required reserve ratio boosted mainland Chinese markets. China's CSI 300 index gained 0.6 percent and the Shanghai composite index was up 0.2 percent. A recovery in tech stocks and a better showing for property and consumption stocks helped Hong Kong's Hang Seng index rally 2.7 percent.

South Korea's KOSPI and Taiwan's Taiex both rose 0.6 percent, with support from Chinese news and Monday's strong US showing.

Risk appetite revived in Japanese markets with the Nikkei 225 rising 1.9 percent and the Topix up 2.2 percent. Gains were nearly across the board, with transportation stocks, banks, autos, and materials among the best performers. Softbank rebounded by 8.0 percent after falling a similar amount Monday as its Chinese tech stock portfolio bounced back.

Australia's All Ordinaries index rose 1.0 percent as reopening stocks that dropped Monday bounced back on more hopeful Covid news. Energy, travel & entertainment, and bank shares were among the day's best performers. Tech and biotech stocks perked up too, with buy-now-pay-later stocks leading.

In Chinese economic news, China's trade surplus in US dollar terms narrowed from $84.54 billion in October to $71.72 billion in November. Exports rose 22.0 percent on the year in November, above expectations centering on a gain of 20 percent.

Looking ahead*

In Asia/Pacific, Japanese GDP and the Reserve Bank of India policy announcement are scheduled. In Europe, no major economic reports are due. In North America, the Bank of Canada policy announcement and US JOLTS job openings report are on tap.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

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