Daily market review

United States

The same stocks that dropped Monday on coronavirus fears led a recovery Tuesday as investors bought the dip, in a replay of the pattern that has prevailed through much of the pandemic. The Dow Jones industrial average rose 1.6 percent, the S&P 500 gained 1.8 percent, and the NASDAQ rallied 2.4 percent.

Cyclicals and reopening stocks that got whacked Monday bounced back Tuesday, including travel & leisure, as investors reasoned the Omicron variant's impact will be limited. President Biden's comments Monday reassured markets that widespread lockdowns were not coming, even as he warned that unvaccinated people are at risk. Energy stocks were among the day's top performers as oil prices jumped and markets saw economic activity remaining robust.

Megacap growth stocks joined the rally in cyclicals, as they rose through the afternoon to boost the major averages. Microsoft rose 2.3 percent, Apple gained 1.9 percent, Amazon was up 2.0 percent, Facebook up 2.7 percent and Tesla up 4.3 percent.

Among companies in focus, Micron Technologies, the US semiconductor bellwether, rallied 11 percent on an earnings and revenues beat, to lift chipmakers globally. Nike gained 6.2 percent after topping earnings expectations too. Nvidia was another winner, up 4.9 percent after positive comments at UBS.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rallied US$2.34 to US$74.18 while spot gold declined US$1.54 to US$1,788.14. The US dollar fell vs. most major currencies but rose vs. the yen. Yields on the US Treasury 30-year bond rose 3 basis points at 1.88 percent, and the 10-year note rose 5 basis points to 1.48 percent.


Dip buying lifted equities, paced by commodities stocks and travel & leisure after their weakness on worries about the Omicron variant. The Europe-wide STOXX 600, the German DAX, the French CAC and the UK FTSE 100 all rose 1.4 percent.

Expectations around the coronavirus were mixed, with some saying risk appetite is due to recover in light of vaccine effectiveness and milder illness associated with the Omicron variant, while concerns remain over its rapid spread and likely new measures from the UK and other countries to prevent health care systems from being overwhelmed.

A recovery in metals prices helped basic resources outperform, with BHP up 2.6 percent. A similar bounce in oil prices boosted energy, with TotalEnergies up 2.4 percent. Travel & leisure bounced, with Lufthansa up 4.6 percent and Intercontinental Hotels up 2.5 percent, as Monday's selloff was seen as overdone. Chipmakers drew support from strong results from Micron, with Infineon up 2.0 percent. Sportwear makers got a boost from upbeat results at Nike, with Adidas up 0.9 percent.

In economic news, investors noted a larger-than-expected drop in German consumer confidence, down to -6.8 in the Gfk survey for January, well below expectations for -2.5, on pandemic effects.

Asia Pacific

Equities recovered on bargain hunting after steep losses the day before on pandemic fears.

A rebound in big technology companies led equities higher as the Nikkei 225 rose 2.1 percent and the Topix gained 1.5 percent. Tokyo Electron rose 4.4 percent on strong results from US chipmaker Micron after the US close. Pharma stocks rose too, with Shionogi up 5.3 percent on good news for its anti-Covid medicine.

China's CSI 300 index rose 0.7 percent and the Shanghai composite index gained 0.9 percent. Property stocks rose on reports that regulators were encouraging bank lending to real estate companies. Energy stocks were notable winners too. Hong Kong's Hang Seng rose 1.0 percent with internet and tech stocks leading.

South Korea's KOSPI rose 0.4 percent and Taiwan's Taiex gained 0.7 percent with support from big tech, including SK Hynix, up 3.3 percent.

Australia's All Ordinaries index rose 0.9 percent paced by health care and energy stocks. Materials, big banks, and logistics outperformed too on dip buying.

Looking ahead*

In Asia/Pacific, Bank of Japan minutes are scheduled for release. In Europe, UK GDP and French PPI reports are scheduled. In North America, US GDP, Chicago Fed national activity index, US consumer confidence, and US existing home sales reports are on tap.

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