Daily market review

US edges up in mixed showing; Europe, Asia extend bounce

United States

Equities were mixed with growth stocks outperforming as interest rates mostly edged down after US consumer price figures roughly matched expectations. The Dow Jones industrial average firmed 0.1 percent, the S&P 500 gained 0.3 percent and the NASDAQ rose 0.2 percent.

Megacaps paced the morning's advance as some players covered short positions after the CPI didn't come in higher still. Google ended up 1.2 percent, Microsoft up 1.0 percent, and Tesla up 3.9 percent. The inflation reading, with an eye-popping 7.0 percent year-on-year rise, weighed on stocks most vulnerable to rising wage pressures, including retailers, restaurants and grocery stores.

Other sectors showing strength included software, chipmakers, metals, autos, and transports. Lagging were investment banks, auto suppliers, airlines, pharma, retail, and restaurants.

Among companies in focus, Jefferies, the investment bank, slipped 9.3 percent on a revenues miss, and Goldman Sachs fell 3.2 percent in sympathy. Biogen, the biotech, fell 6.7 percent after Medicare limited repayments for its Alzheimer's drug. On the positive side, Wolfspeed, the chipmaker, rose 1.4 percent on an analyst upgrade, and Infosys, the technology consultant, gained 2.9 percent after better quarterly results.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 89 cents to US$84.54 while spot gold rose US$4.48 to US$1,827.03. The US dollar fell vs. major currencies. Yields on the US Treasury 30-year bond rose 2 basis points to 2.09 percent, and the 10-year note was flat at 1.74 percent.

Europe

European equities extended their rebound as dip-buying momentum continued from Tuesday. The Europe-wide STOXX 600 rose 0.7 percent, the German DAX firmed 0.4 percent, while the French CAC and UK FTSE 100 both gained 0.8 percent.

Best sectors were basic resources and oil & gas, with a lift from a weaker dollar and expectations for Chinese monetary easing following lower Chinese inflation readings. Technology stocks outperformed too as the sector rebounded on bargain hunting and as bond yields steadied after recent steep increases. Growth and defensive sectors lagged, including real estate, personal & household, and health care.

Among companies in focus, Ferrexpo, the miner, rose 4.8 percent on strong output figures. Among tech stocks, TeamViewer, the software company, rallied 17 percent and OVH Groupe, the cloud computing company, rose 4.6 percent on strong quarterly results.

In economic news, Eurozone industrial production was surprisingly strong in November, but only after sharp downward revisions to the September and October data. A 2.3 percent monthly spurt was nearly five times the market consensus but was built on an October level that was some 1.7 percentage points below its reported value last month.

Asia Pacific

Equities perked up with the rebound in US growth stocks after Federal Reserve Chair Jerome Powell's comments were viewed as less hawkish than feared.

Chinese equities tracked US equities higher with growth stocks leading, and risk appetite got an additional lift after lower-than-expected Chinese inflation figures raised expectations for monetary easing from the People's Bank of China. China's CSI 300 index rose 1.0 percent and the Shanghai composite rose 0.8 percent. Among sectors, materials and industrials outperformed while real estate lagged.

Hong Kong outperformed the region with the Hang Seng index soaring 2.8 percent. Leading were technology/internets plus consumer goods, while property and bank stocks lagged.

Japanese equities advanced nearly across the board, with mining and marine shipping leading, and tech stocks getting a lift from US tech strength. The Nikkei 225 rose 1.9 percent and the Topix gained 1.6 percent. Utilities and insurance slipped. Risk appetite benefited from a somewhat improved regional economic assessment from the Bank of Japan.

South Korea's KOSPI gained 1.5 percent with support from the Powell comments and lower South Korean bond yields. Taiwan Taiex rose 0.5 percent.

Australian equities tracked US markets higher with the All Ordinaries up 0.7 percent. Most sectors rose with materials, tech, energy, and telecoms leading. TPG, the telecom, rose 5.0 percent after an upgrade at JP Morgan.

In Chinese economic news, the headline consumer price index rose 1.5 percent on the year in December, slowing from 2.3 percent in November and below the consensus forecast for an increase of 1.8 percent.

Looking ahead*

In Asia/Pacific, the Chinese merchandise trade report is scheduled. In Europe, the Italian industrial production report is on tap. In North America, US jobless claims and US PPI-FD reports are due.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

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