Daily market review

United States

Equities consolidated lower after three days of gains as buying ran out of steam and caution set in ahead of US consumer price data due Friday. The Dow Jones industrial average was unchanged, the S&P 500 declined 0.7 percent, and the NASDAQ lost 1.7 percent.

Among sectors, real estate, consumer discretionary, and technology stocks lagged the most, along with energy stocks as oil prices slipped. Autos weighed on consumer discretionary. Reopening stocks were generally weaker on profit-taking after strength this week. Utilities, health care, and consumer staples edged up.

The Dow industrials held up better than the other major averages with a boost from Walgreens Boots, up 1.4 percent, and McDonalds, up 1.1 percent.

Among companies in focus, Tesla fell 6.1 percent on a report it is under investigation by the National Highway Safety Commission. Southwest Airlines fell 3.7 percent and Allstate fell 1.2 percent after analyst downgrades. Nvidia fell 4.2 percent to lead tech lower. On the positive side, Ciena, the telecom equipment company, rose 16 percent on a revenues beat and stock buyback. Hormel Foods rose 4.7 percent on an earnings and revenues beat.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.96 to US$74.04 while spot gold declined US$8.86 to US$1,775.33. The US dollar rose vs. major currencies. Yields on the US Treasury 30-year bond declined 3 basis points to 1.87 percent, and the 10-year note declined 1 basis point to 1.49 percent.


Equities edged down with commodities stocks weakest on profit-taking following recent gains. Defensive sectors held up best, including health care and utilities as investors eyed European restrictions to curb the pandemic. The Europe-wide STOXX 600 and the French CAC both declined 0.1 percent, the German DAX lost 0.3 percent, and the UK FTSE 100 fell 0.2 percent.

Health care fared best with support from news that three shots of Pfizer/BioNTech's vaccine controlled the Omicron variant. AstraZeneca rose 1.2 percent on news its medicine had been approved in the US to prevent Covid-19. Weaker oil prices hit energy stocks with Royal Dutch Shell off 1.3 percent.

Among companies in focus. Unicredit jumped 11 percent after raising its profits guidance, and Deutsche Bank fell 2.4 percent on a Wall Street Journal report that it failed to disclose a complaint in its asset management business to the Justice Department.

Asia Pacific

Equities were mixed with Chinese markets advancing in response to easier Chinese monetary policy while Japan and Australia gave back some of the week's gains.

Chinese markets extended Wednesday's gains after the People's Bank of China cut bank reserve requirements, among other signs authorities are more inclined to provide policy support. Risk assets reacted positively to lower inflation readings, which were seen providing the PBOC more room to ease.

China's CSI 300 index rose 1.7 percent and the Shanghai composite index gained 1.0 percent. Hong Kong's Hang Seng index gained 1.1 percent. Markets saw no significant adverse reaction to news that Fitch Ratings put developers China Evergrande and Kaisa into its restricted default category after missed debt payments, and PBOC Governor Yi Gang said default was a "market event" to be addressed in the market.

South Korea's KOSPI rose 0.9 percent and Taiwan's Taiex rose 0.5 percent, with support from strength in Chinese markets.

Profit-taking after good gains earlier in the week dampened Japanese markets with the Nikkei 225 down 0.5 percent and the Topix off 0.6 percent. Investors trimmed risk positions ahead of a batch of central bank policy meetings next week.

Australia's All Ordinaries index eased 0.2 percent. Most sectors retreated, led by declines in commodities prices, including oil, and weakness in consumer discretionary and consumer staples, after Wednesday's rally in risk assets. Defensive sectors held up best, including utilities and real estate.

Looking ahead*

In Asia/Pacific, the Japanese PPI and Indian industrial production reports are scheduled. In Europe, Germany CPI, UK industrial production, UK merchandise trade, UK monthly GDP, and Italian industrial production reports are due. In North America, US CPI, US consumer sentiment, and US Treasury statement reports are on tap.

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