Daily market review

United States

Equities had a distinct risk-on tone to start the new year, with cyclicals leading and defensive sectors lagging. The Dow Jones industrial average gained 0.7 percent, the S&P 500 rose 0.6 percent and the NASDAQ rose 1.2 percent. The Dow and S&P 500 set record closing highs.

Expectations for another positive earnings season starting later this month underpinned risk appetite along with the inclination to put money to work as the new year gets under way. Many investors are buying into the view that the explosion of Omicron cases will not derail the global recovery. News that US Senator Joe Manchin and the Biden administration have resumed infrastructure talks kept alive hopes for the administration's Build Back Better plan.

Among sectors, energy stocks tracked oil prices higher. Financials got a boost from surging bond yields with the 10-year note yield up 12 basis points on the day, with Goldman Sachs up 3.3 percent. Consumer discretionary stocks advanced with a big lift from Tesla, the momentum favorite, up 13.5 percent after reporting surprisingly robust fourth-quarter deliveries. Media stocks boosted communications services, including ViacomCBS, up 6.8 percent and Discovery, up 7.6 percent. Tech stocks matched a strong gain in the NASDAQ and Apple, up 2.5 percent, became the first US company to reach a $3 trillion market capitalization.

Lagging were consumer staples as the stay-at-home trade faded, along with health care and real estate investment trusts. Vaccine makers Moderna, down 7.5 percent, and Pfizer, down 4.1 percent, weighed on health care.

Among other companies in focus, The Container Store jumped 12 percent after announcing it will buy Closet Works. Wolfspeed, the chipmaker, rose 8.4 percent, and PayPal gained 3.4 percent after analyst upgrades.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.16 to US$78.94 while spot gold dropped US$27.54 to US$1,802.13. The US dollar rose vs. most major currencies. Yields on the US Treasury 30-year bond surged 13 basis points to 2.03 percent and the 10-year note gained 13 basis points at 1.64 percent.


Equities improved with a boost from autos and other cyclicals on company news, and a firm start on Wall Street as markets are hoping the hit from the Omicron variant will prove mild. The Europe-wide STOXX 600 rose 0.5 percent, the German DAX and French CAC both gained 0.9 percent, and the UK market was on holiday.

Autos rose on positive sales reports, including surprisingly strong deliveries from Tesla. Retail stocks outperformed with a boost from Ahold Delhaize, up 1.3 percent on its share buyback plans. Rising European bond yields lifted bank stocks, with Commerzbank up 4.2 percent.

Hopes for a relatively benign outcome on Omicron boosted airlines with Ryanair up 4.1 percent and Air France-KLM up 4.9 percent. Lufthansa rallied 9.5 percent on an analyst upgrade.

Asia Pacific

Equities were mixed in limited activity with mainland Chinese, Japanese and Australian markets shut.

Hong Kong's Hang Seng index declined 0.5 percent as property stocks suffered from another suspension in China Evergrande shares pending news. Health care stocks lagged on weakness in biotech amid Chinese regulatory concerns.

South Korea's KOSPI rose 0.4 percent with support from upbeat exports and manufacturing PMI reports. The Taiwan Taiex firmed 0.3 percent, with a boost from market heavyweight Taiwan Semiconductor Manufacturing, up 2.6 percent, on the first trading day of the new year.

Looking ahead*

In Asia/Pacific, Japanese PMI manufacturing final and Chinese PMI manufacturing reports are scheduled for release. In Europe, the following are on tap: German retail sales, Swiss CPI, French CPI. Germany unemployment rate, UK money supply, UK PMI manufacturing final. In North America, the following are due: Canadian industrial product prices, US ISM manufacturing, and US JOLTS job openings.

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