Daily market review

United States

Equities rebounded into positive territory with growth stocks leading in a positive reaction to the Federal Reserve policy announcement. Technology stocks led the way higher as investors bought back stocks they sold ahead of the Federal Reserve announcement, including Apple, up 2.9 percent. The Dow Jones industrial average rose 1.1 percent, the S&P 500 gained 1.6 percent and the NASDAQ rose 2.2 percent.

The Fed's statement generally matched expectations in a hawkish policy shift that pushed bond yields somewhat higher, but many equities investors appeared relieved the Fed policy outlook was not more aggressive still, and noted that an immediate source of uncertainty has been removed.

The US central bank doubled its tapering pace to $30 billion per month, starting in mid-January, which will end asset purchases by mid-March, instead of its earlier plan to unwind by mid-June. The Fed is now expected to raise policy rates by the spring instead of the summer.

Among tech stocks, software and chipmakers joined Apple in showing good gains, with Nvidia up 7.5 percent. Health care got a boost from pharma and biotech, with Eli Lilly up 10 percent after raising its guidance. Tesla, the momentum play, swung back into positive territory after the Fed announcement to end up 1.8 percent.

On the downside, energy and materials lagged as commodities remained under downward pressure after weakness overnight following soft Chinese economic data. Nucor, the steelmaker, dropped 8.6 percent after issuing a profits warning.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 95 cents to US$74.31 while spot gold rose US$7.67 to US$1,778.89. The US dollar was mixed vs. major currencies. Yields on the US Treasury 30-year bond rose 4 basis points to 1.87 percent, and the 10-year note gained 1 basis point to 1.45 percent.


Equities were mixed with tech and health care outperforming on positive company news. The Europe-wide STOXX 600 firmed 0.3 percent, the German DAX rose 0.2 percent, the French CAC rose 0.5 percent and the UK FTSE 100 declined 0.7 percent.

Among sectors, technology fared best with chipmakers STMicroelectronics up 2.2 percent and Infineon Technologies up 1.2 percent after announcing expansions in their product lines. In health care, Sanofi and GlaxoSmithKline rose 1.4 percent and 0.7 percent, respectively, despite new delays in trials of their joint Covid vaccine.

On the downside, UK markets lagged as basic resources and oil & gas stocks weakened after Chinese economic data confirmed expectations for slowing business activity. Retailers lagged too with Inditex off 5.2 percent and H&M off 2.8 percent despite positive trading results amid concern over restrictions flowing from the resurgent coronavirus in Europe and the US.

Among companies, Cineworld dropped 39 percent after an Ontario court ordered the movie chain to pay $957 million in damages to Cineplex after calling off a planned acquisition.

Asia Pacific

Equities were mostly weaker with growth stocks off the most but activity was limited by caution before the Fed policy announcement.

Chinese tech stocks were shaken by a report in the Financial Times that the US was set to place eight Chinese companies on its investment blacklist, including drone maker DJI. Tech and biotech stocks were hit, with Hong Kong's Hang Seng index down 0.9 percent.

China's CSI 300 index slipped 0.9 percent and the Shanghai composite index lost 0.4 percent with tech stocks leading the decline. Health care and defensive sectors held up best.

South Korea's KOSPI firmed 0.1 percent and Taiwan's Taiex gained 0.4 percent, in quiet trading as the market corrected some of the previous day's declines.

Japanese equities edged up with the Nikkei 225 up 0.1 percent and the Topix up 0.5 percent. Value stocks outperformed growth on carryover from Wall Street trading on Tuesday. Trading was light as investors awaited an expected acceleration in tapering and a signal of faster rate increases from the Fed.

Australia's All Ordinaries index dropped 0.8 percent, with declines nearly across the board but growth stocks lagging. Tech stocks fell on weakness in buy-now-pay-later names. Reopening stocks were hurt by virus worries. Metals depressed materials. Utilities managed gains as the market pared risk ahead of the Fed announcement.

Looking ahead*

In Asia/Pacific, New Zealand GDP, Japanese merchandise trade, Japanese PMI composite flash, and Australian Labour Force Survey reports are scheduled. In Europe, the Bank of England, Swiss National Bank, and European Central Banks are scheduled to announce policy decisions. In European economic data, the following are due: French business climate indicator, French PMI composite flash, German PMI composite flash, Eurozone PMI composite flash, UK PMI composite flash, Italian merchandise trade, and Eurozone merchandise trade figures. In North America, the following reports are on tap: US housing starts and permits, US jobless claims, Philadelphia Fed manufacturing survey, US industrial production, US PMI composite flash, and Kansas City Fed manufacturing survey.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies