Daily market review

United States

Value/cyclical stocks were better bid while growth stocks sagged after a mixed US employment report appeared to confirm expectations for a relatively quick end to expansive Federal Reserve policy. The Dow Jones industrial average was flat, the S&P 500 declined 0.4 percent and the NASDAQ lost 1.0 percent.

US non-farm payrolls missed to the downside but other aspects of the report, including a drop in unemployment and a stronger gain in average earnings, played into inflation concerns that have spurred Fed officials to pledge a faster end to policy accommodation.

On the positive side, value stocks including financials, energy, industrials, and utilities, added to their recent gains as investors favored the recovery trade and continued rotating out of pricey growth stocks that have outperformed during the pandemic era of maximum central bank stimulus. Financials were notable winners Friday as the 10-year note yield briefly broke above 1.80 percent Friday, up nearly 30 basis points this week.

Lagging Friday were technology, consumer discretionary, and health care. Megacaps were mixed, with bargain hunting lifting Apple, up 0.1 percent, and Microsoft, up 0.1 percent, after a rough week. Tesla, the momentum champion, still ended down 3.5 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose one cent to US$81.91 while spot gold rose US$6.73 to US$1,795.21. The US dollar weakened vs. major currencies. Yields on the US Treasury 30-year bond rose 4 basis points to 2.12 percent, and the 10-year note gained 4 basis points at 1.77 percent.


Equities mostly weakened on coronavirus news and disappointing economic data. The Europe-wide STOXX 600 declined 0.4 percent, the German DAX fell 0.7 percent, and the French CAC lost 0.4 percent. The UK FTSE 100 gained 0.5 percent with a boost from strength in basic resources and energy.

Concern over anti-Covid restrictions haunted travel & leisure stocks as Europe contends with a surge in Omicron variant cases. Germany was set to tighten restrictions on access to public facilities. Soft French and German industrial production reports, and another upside surprise on Eurozone inflation figures were negatives, along with another soft day on Wall Street after mixed US employment figures.

Other weak sectors included real estate, food & beverage, autos & parts, industrials, personal and household goods, retail, and construction & materials. On the positive side, rising commodities prices lifted basic materials and energy stocks, including British Petroleum, up 2.1 percent, and Antofagasta, up 1.9 percent.

Among companies in focus, Royal Dutch Shell rose 0.3 percent after saying it will continue planned share buybacks. STMicroelectronics, the chipmaker, gained 3.5 percent, on a revenues beat.

Asia Pacific

Equities found support after selling off initially on the Federal Reserve's hawkish turn.

Chinese recovered initial losses with support from reported comments from the head of the Chinese Securities Regulatory Commission pledging to limit market volatility. On the negative side, another stingy provision of reserves from the People's Bank of China added to nerves. China's CSI 300 index was up 0.1 percent and the Shanghai composite down 0.2 percent. Real estate and energy beat the market while consumer staples lagged.

Hong Kong outperformed with a boost from strength in oil and gas stocks, leaving the Hang Seng index up 1.8 percent.

Japanese markets were flat to lower with most sectors weaker in cautious trading ahead of US employment figures. The Nikkei 225 was flat and the Topix declined 0.1 percent. Growth stocks continued to lag value/cyclicals, as has been the recent trend. Disappointing Japanese household spending figures put a damper on market sentiment.

South Korea's KOSPI advanced by 1.2 percent with a boost from Samsung, up 1.8 percent after upbeat earnings guidance. Taiwan's Taiex slipped 1.1 percent on weakness in big tech companies, including Taiwan Semiconductor, off 1.6 percent, as it corrected a strong start to the year.

Australian equities rebounded from Thursday's selloff, with the All Ordinaries up 1.2 percent. Gains were across the board, paced by utilities, energy, and financials. Tech stocks recovered from oversold conditions All sectors advanced, led by sharp gains in energy, financials, and utilities, followed by materials and oversold tech stocks.

In economic news, Japanese real spending by households fell 1.3% on year in November, marking the fourth straight year-on-year drop after a 0.6% fall in October. It was much weaker than the median economist call for a 1.6% rise.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

Looking forward