Daily market review

United States

Growth stocks extended their recovery to lead major stock indexes higher Monday. Gains were across the board but value/cyclicals stocks lagged, as investors rotated back into beaten-down growth stocks, in a repeat of Friday's pattern. The Dow Jones industrial average rose 1.2 percent, the S&P 500 gained 1.9 percent and the NASDAQ rallied 3.4 percent.

Analyst upgrades lifted Spotify, up 13 percent, Netflix, up 11 percent, and Tesla, up 11 percent, along with bargain-hunting in Apple, up 2.6 percent, Amazon, up 3.9 percent, and Nvidia, up 7.2 percent. Momentum traders latched onto the bounce as they hoped the dip-buying trade that worked during the period of extraordinary Federal Reserve support would continue to work as the Fed pulls back.

Other media stocks followed Netflix higher, with Disney up 3.1 percent and Discovery Communications up 2.8 percent. Consumer discretionary stocks beat the market, including restaurants and automakers, with Chipotle up 5.4 percent and McDonalds up 1.3 percent. Among autos, Ford rose 3.9 percent and GM was up 5 percent. Among Dow stocks, Boeing rose 5.1 percent and Salesforce gained 4.7 percent.

On the downside, consumer staples and pharma lagged, with Pfizer off 3.0 percent, although Moderna gained 6.2 percent after the Food & Drug Administration gave full approval to its Covid vaccine. Analyst downgrades hurt Kellogg, down 3.5 percent, and Charles Schwab, down 1.4 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 64 cents to US$91.21 while spot gold rose US$10.32 to US$1,799.02. The US dollar fell vs. most major currencies. The US Treasury 30-year bond yield rose 4 basis points to 2.12 percent, and the 10-year note yield was flat at 1.79 percent.


European equities improved in a mixed showing with technology while basic resources and other value stocks lagged. The Europe-wide STOXX 600 firmed 0.7 percent, the German DAX gained 1.0 percent, the French CAC was up 0.5 percent, and the UK FTSE 100 was flat.

Dip-buying boosted technology stocks after a terrible January. Meanwhile, financials got a boost from an easing in political uncertainty with Sergio Mattarella's return as president in Italy, which allows Mario Draghi to remain as prime minister, plus the Socialist Party's surprise outright victory in Portuguese snap elections. Industrials outperformed too, with ABB up 1.9 percent and Siemens AG up 1.5 percent. Travel & leisure stocks were bolstered as investors bought into the peak-Omicron trade in Europe, with more countries lifting anti-Covid restrictions.

Basic resources fell after weaker than expected Chinese purchasing managers reports, with miners BHP down 1.3 percent and Anglo American down 2.8 percent. A 30 percent selloff in Saipem, the Italian oilfield services company, depressed oil & gas stocks.

Asia Pacific

Asia/Pacific mostly rebounded Monday but activity was limited with mainland China, South Korea, and Taiwan on holiday.

Japanese markets rose with growth stocks leading, as occurred on Wall Street Friday. The Nikkei 225 rose 1.1 percent and the Topix was up 1.0 percent. Among companies in focus, Oriental Land, a tourism firm, rose 5.9 percent after its trading update. Recruit Holdings, a human resources company, gained 5.5 percent after announcing a share buyback.

Hong Kong bounced back with the Hang Seng index up 1.1 percent. Tech and health care stocks led the way higher, followed by financials and property stocks, amid expectations for monetary and fiscal policy support.

India's BSE SENSEX gained 1.4 percent as many investors considered the market oversold. An upbeat government growth forecast for the fiscal year ahead added to positive sentiment. Among companies in focus, Tech Mahindra, an IT consultant, rose 5.1 percent on positive earnings and Tata Motors gained 4.1 percent ahead of its earnings release.

Australian equities lagged the region as the All Ordinaries index was flat. Sentiment has been dampened by expectations the Reserve Bank of Australia will end its quantitative easing program Tuesday and signal a rate increase later this year. Risk assets also reacted badly to Atlanta Federal Reserve President Raphael Bostic's weekend comment to the Financial Tines that he would consider raising the federal funds rate by 50 basis points in March, if warranted by the economic data.

Looking ahead*

In Asia/Pacific, New Zealand merchandise trade, Japanese unemployment rate, South Korean external trade, Japanese PMI manufacturing final, Australian retail sales, Indian PMI manufacturing, and the Reserve Bank of Australia monetary policy announcement are scheduled. In Europe, German retail sales, Swiss retail sales, French CPI, Swiss SECO consumer climate, Swiss SVME PMI, German PMI manufacturing, German unemployment rate, ECB lending survey, Eurozone PMI manufacturing final, UK M4 money supply, UK PMI manufacturing, and Eurozone unemployment rate reports are due. In North America, Canadian monthly GDP, US PMI manufacturing, US ISM manufacturing, US construction spending, and US JOLTS reports are on tap.

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