Daily market review

United States

Broad, heavy selling continued Friday with investors repricing risk assets to reflect higher bond yields and expectations for yields to go even higher.

Equities ended at the day's lows for a third straight week of losses to begin 2022, even as US Treasury yields fell back following their run-up through last week. The Dow Jones industrial average lost 1.3 percent, the S&P 500 fell 1.9 percent, and the NASDAQ dropped 2.7 percent.

Highly-valued FANMAG stocks led the decline, with the latest phase in the risk-off move triggered late Thursday after Netflix, down 22 percent, issued disappointing subscriber guidance. The NASDAQ has fallen by 13 percent year to date as investors have soured on hopeful growth stories.

Cyclicals suffered too, with energy, materials, and consumer discretionary, including automakers, among the laggards. Among Dow stocks, Disney dropped 6.9 percent, Boeing lost 4.1 percent, and Visa fell 3.9 percent.

In the consumer discretionary category, Amazon was a notable loser, down 6.0 percent, and Tesla, the recent momentum champion, dropped 5.3 percent to end at the day's worst levels.

Defensive sectors outperformed, including consumer staples, real estate investment trusts, and utilities.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil eased 25 cents to US$87.64 while spot gold fell US$7.29 to US$1,830.84. The US dollar was mixed vs. major currencies. Yields on the US Treasury 30-year bond fell 6 basis points to 2.07 percent, and the 10-year note fell 5 basis points at 1.76 percent.


De-risking hit European equities with value/cyclicals leading the decline. The Europe-wide STOXX 600 and the French CAC both dropped 1.8 percent, the German DAX lost 1.9 percent, and the UK FTSE 100 lost 1.2 percent.

Among cyclicals, basic resources saw the worst losses as the sector continued to give back its recent gains. Energy stocks suffered as crude oil prices fell back from seven-year highs. Autos & parts sagged, and travel & leisure fell back too. Among growth stocks, technology suffered the most amid concern over higher interest rates and the Federal Reserve's hawkish turn.

Among companies in focus, Siemens Energy fell 16 percent and Siemens Gamesa Renewable Energy dropped 14 percent after both cut guidance amid supply chain trouble. Nordic Entertainment, the media company, fell 6.8 percent on readthrough from the negative Netflix guidance. AkzoNobel, the paint giant, fell 2.6 percent on disappointing profits guidance.

Asia Pacific

Wall Street's losses Thursday extended into Asia/Pacific markets Friday in a broad risk-off move, though most markets recovered from their opening lows.

Japanese stocks rebounded from the day's worst levels but still ended lower, with growth stocks lagging. The Nikkei 225 fell 0.9 percent and the Topix was off 0.6 percent. Mining stocks led the decliners as commodities prices dropped. Other lagging sectors included tech, autos, oil & coal, banks, and appliances. Toyota fell 2.5 percent after announcing production cuts due to parts shortages.

South Korea's KOSPI fell 1.0 percent and the Taiwan Taiex was down 1.8 percent, led by tech stock losses following NASDAQ's decline.

Worries about Federal Reserve tightening dented Chinese equities again, with China's CSI 300 index and the Shanghai composite both down 0.9 percent. Growth stock lagged. Limiting the declines were expectations for more steps from the People's Bank of China to boost the economy. Health care led the losers while consumer staples managed gains.

Properties stocks outperformed to help Hong Kong's Hang Seng index recover early losses to end up 0.1 percent. Oil & gas stocks lagged on falling oil prices.

Falling commodities prices and worries about Fed tightening and higher bond yields hit Australian equities, with the All Ordinaries plunging 2.3 percent. Materials led the decliners, along with energy, consumer discretionary, and health care. Holding best but still more than 1 percent lower were consumer staple, industrials, and real estate investment trusts.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

Looking forward