Daily market review

United States

Equities rose and were holding onto the week's gains after a mostly as-expected US consumer price report, with late gains adding to the day's advance. The Dow Jones industrial average rose 0.6 percent, the S&P 500 gained 1.0 percent and the NASDAQ firmed 0.7 percent.

Initial reaction to US consumer price figures was positive as the results, while concerning, were not as bad as feared, and appeared to confirm expectations for the Federal Reserve to accelerate its tapering process at next week's policy meeting. US market interest rates declined after the CPI came in strong, as investors appear to expect slower growth with a tighter Fed stance and lingering Covid concerns.

Most sectors rose but large caps fared best, especially technology and consumer staples, and rising oil prices lifted energy stocks. Among tech stocks, Oracle rallied 16 percent and Broadcom gained 8.3 percent after reporting surging growth. In consumer staples, grocery stores and health & personal care stocks perked up, with Kroger up 2.2 percent, and Procter & Gamble up 1.4 percent. Costco rallied 6.6 percent on a big earnings beat.

Lagging were communications services and health care, with the latter hurt by a selloff in Moderna, down 5.6 percent after the market reacted badly to its update on its experimental flu vaccine. Industrials lagged on weakness in airlines on Omicron worries.

Among companies in focus, Lululemon fell 1.8 percent on disappointing guidance despite an earnings beat. Chewy, the pet food leader, fell 8.3 percent after weak customer numbers and guidance.

In economic news, consumer prices rose 0.8 percent on the month in November, above Econoday's consensus forecast of 0.7 percent but marking a slowdown from 0.9 percent in October. Prices were up 6.8 percent from November 2020, the largest gain since June 1982, in line with expectations but up from 6.2 percent in October.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.30 to US$75.34 while spot gold rose US$7.68 to US$1,783.01. The US dollar was mixed vs. major currencies. Yields on the US Treasury 30-year bond rose 1 basis point to 1.89 percent, and the 10-year note declined 1 basis point to 1.48 percent.


Equities retreated to consolidate gains from earlier in the week, with virus concerns in focus again. The Europe-wide STOXX 600 fell 0.3 percent, the French CAC fell 0.2 percent, the German DAX eased 0.1 percent and the UK FTSE 100 was down 0.4 percent.

Among sectors, autos, miners, and food & beverage held up best, while tech, retail, and travel & leisure lagged. Reopening stocks suffered from rising Covid case counts in Europe and forecasts for cases to continue rising into year end. Weakness in US technology shares weighed on tech stocks. Rising European natural gas prices dampened sentiment as reserves continued to shrink and markets were on edge over the Ukraine situation and the Nord Stream 2 pipeline.

Among companies in focus, Bayer, the chemicals giant, rose 2.0 percent after a California jury issued a favorable ruling in a lawsuit over its Roundup weedkiller. BioMerieux, the biotech, rose 2.4 percent after raising its guidance. On the downside, Ashmore, the investment manager, declined 2.7 percent after a downgrade at Goldman Sachs. Carl Zeiss Meditech, the biotech, lost 1.3 percent after as-expected quarterly results.

Asia Pacific

Equities were mostly lower in cautious trading ahead of US consumer price figures with investors taking profits ahead of the weekend. Growth stocks came under pressure after weakness in US tech stocks Thursday.

China's CSI 300 index declined 0.5 percent and the Shanghai composite index eased 0.2 percent. Most sectors fell, with health care, real estate, and energy off the most. Hong Kong's Hang Seng index declined 1.1 percent, with health care and biotech leading the way down.

South Korea's KOSPI fell 0.6 percent and Taiwan's Taiex slipped 0.5 percent, as tech stocks came under pressure after losses on Wall Street.

US tech stock losses continued in Japanese markets with the Nikkei 225 down 1.0 percent and the Topix off 0.8 percent. Investors reacted badly to another hot inflation reading in Japanese producer price figures, which raised concern over corporate profits.

Australia's All Ordinaries index dipped 0.3 percent as the market corrected some of its recent gains on reopening optimism. Most sectors slipped, paced by tech, biotech, materials, and financials. Defensive sectors held up better.

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