Daily market review

United States

Equities swung back into positive territory late Monday on bargain hunting after extending last week's rout through much of the day. The Dow Jones industrial average and the S&P 500 both ended up 0.3 percent and the NASDAQ edged up 0.6 percent. The indexes were down more than 2 percent at midday in a flight from risk.

FANMAG stocks and other growth/momentum plays that earlier led the decline saw the fastest rebound, with stocks like Microsoft ending up 0.1 percent after falling nearly 2 percent earlier. Bulls called for a rebound on expectations for decent quarterly results later this week from leading megacaps. Several large investment banks are promoting the idea that the selloff and worries about the tightening cycle have been overdone.

Cyclical/value shares recovered to end at the day's highs, with Walt Disney up 0.1 percent, Boeing down 0.6 percent, and JP Morgan down 0.1 percent. Among the day's winners, Haliburton, the giant oil servicer, rose 3.8 percent after an earnings beat and raising its dividend. Kohl's, the chain store, rallied 36 percent on takeover talk.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil lost 96 cents to US$86.68 while spot gold rose US$11.57 to US$1,842.41. The US dollar was mostly higher vs. major currencies. Yields on the US Treasury 30-year bond rose 4 basis points to 2.11 percent, and the 10-year note was flat at 1.76 percent.


European equities dropped on widespread risk aversion flowing from inflation and rate-hike worries and the threat of conflict between Russia and the West over Ukraine. The Europe-wide STOXX 600 and the German DAX both dropped 3.8 percent, the French CAC lost 4.0 percent, and the UK FTSE 100 was down 2.6 percent.

Cyclical stocks including travel & leisure and autos & parts were hit by worries that a worsening Ukraine conflict will hit business activity and consumer demand. Technology and growth sectors continued to lag on fallout from the rising rate environment and caution ahead of more big growth stock earnings due this week. Defensive sectors including telecom, household goods, and food & beverages held up better.

Among companies in focus, Lufthansa fell 5.8 percent after a report it is in talks to acquire a stake in ITA Airways. On the positive side, Vodafone rose 5.4 percent on reports it is exploring a series of acquisitions. Unilever rose 7.3 percent on news activist investor Nelson Peltz has a stake in the consumer products giant.

Asia Pacific

Asia/Pacific equities were mixed with investors awaiting US company earnings and Wednesday's Federal Reserve policy announcement. Tech stocks remained under pressure after weakness on Wall Street. Sentiment was depressed by uncertainty over regional anti-Covid restrictions and geopolitical concerns but more easing steps from the People's Bank of China provided support.

Japanese stocks were mixed with tech stocks weak while energy and shipping stocks outperformed. The Nikkei 225 firmed 0.2 percent and the Topix was up 0.1 percent.

South Korea's KOSPI lost 1.5 percent on tech stocks losses. The Taiwan Taiex recovered early declines to end up 0.5 percent as Taiwan Semiconductor recovered to end 1.9 percent higher.

Mainland equities were split with real estate and materials stocks outperforming while telecommunications and consumer staples lagged. China's CSI 300 index firmed 0.2 percent and the Shanghai composite was flat.

Another selloff in internet/tech stocks undercut Hong Kong stocks with the Hang Seng index off 1.2 percent. China Evergrande improved 3.9 percent on a report its restructuring was moving ahead.

Australian equities slipped on bearish sentiment linked to US rate hike expectations, with the All Ordinaries down 0.7 percent. Most sectors ended lower paced by tech stocks. Other laggards included utilities and materials, with precious metals producers leading the way down. Holding up best were consumer staples, including grocery stores, plus real estate investment trusts.

Looking ahead*

In Asia/Pacific, Australia CPI is scheduled for release. In Europe, UK public sector finances, German Ifo Survey, and UK CBI industrial trends figures are on tap. In North America, US Case-Shiller home price, US FHFA house price, US consumer confidence, and Richmond Fed manufacturing reports are due.

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