Daily market review

United States

US equities gave up its gains into the close Monday as losses in Meta and other big growth stocks weighed on the averages, even as value/cyclicals improved on the reopening trade. The Dow Jones industrial average was flat, the S&P 500 declined 0.4 percent and the NASDAQ slipped 0.6 percent.

Energy stocks outperformed despite a retreat in oil prices after weeks of gains, with supermajors leading. Banks advanced as bond yields remained near recent highs. Cruise lines led travel & leisure higher as investors see the pandemic easing. Airlines advanced to boost industrials, with Spirit Airlines soaring 17 percent on news it will be acquired by Frontier, which rose 3.5 percent.

On the downside, Meta/Facebook, down 5.1 percent, resumed last week's selloff after the social network threatened to shut down its operations in Europe amid regulatory trouble over its data practices. Google slipped by 2.9 percent to give back some of last week's gains. Netflix fell 2.0 percent as investors focused on its troubles. Microsoft, the index heavyweight, declined 1.6 percent, and Apple eased by 0.4 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined by 32 cents to US$92.76 while spot gold rose US$13.46 to US$1,821.43. The US dollar was mixed vs. major currencies. Yields on the US Treasury 30-year bond was unchanged at 2.22 percent and the 10-year note was flat at 1.92 percent.


Equities were mostly better with cyclicals and reopening stocks leading the winners. The Europe-wide STOXX 600 and the German DAX both rose 0.7 percent and the French CAC and the UK FTSE 100 both gained 0.8 percent.

Among sectors, basic resources outperformed, with industrial metals leading, on a report that China plans to step up iron and steel production. Travel & leisure shares popped up as more countries appear poised to ease travel restrictions for people who have been vaccinated. Banks advanced with rising bond yields as investors see central banks turning more hawkish to counter inflation concerns.

European Central Bank President Christine Lagarde repeated her warning from last week that upside inflation risks have increased but she also said the Eurozone is not seeing the same level of overheating evident in many other economies.

Among companies in focus, Ceconomy, the retailer, rose 3.9 percent on a profits beat. Faurecia, the auto parts supplier, rose 0.9 percent on positive guidance after its merger with Hella. H&M, the retailer, rose 1.0 percent after an analyst buy recommendation. On the downside, Lamprell, the builder, dropped 14 percent on lockdown and supply chain effects.

Asia Pacific

Asia/Pacific markets were mixed with Chinese markets better on their return from holiday while most other markets weakened on concern about faster Federal Reserve tightening after Friday's strong US jobs report.

China's CSI 300 index rose 1.5 percent and the Shanghai composite gained 2.0 percent. Hong Kong's Hang Seng index was flat. The Taiwan Taiex rose 1.3 percent. Value names topped growth on concern over rising interest rates. Among sectors, materials and oil & gas stocks fared best while technology and consumer stocks lagged.

Concern over faster Fed rate increases and rising Covid case counts undercut Japanese markets, with the Nikkei 225 down 0.7 percent and the Topix off 0.2 percent. Among companies in focus, Toshiba rose 1.6 percent after announcing it will split into two separate companies.

The South Korean KOSPI declined 0.2 percent as investors focused on rising Covid cases and fretted over rising US interest rates. Big tech stocks led the decliners, with Samsung off 1.4 percent and SK Hynix down 1.2 percent.

Indian equities were hit by rising interest rates and higher oil prices, with the BSE SENSEX dropping 1.8 percent. Among stocks in focus, Larsen & Toubro, the conglomerate, fell 3.6 percent and ICICI Bank fell 2.3 percent.

Australian equities were mixed to weaker, with the All Ordinaries index and the ASX 200 down 0.1 percent. Energy, materials, and technology stocks held up best while lagging were real estate investment trusts, health care, and telecom.

Looking ahead*

In Asia/Pacific, Japanese household spending, Chinese new yuan loans, and Hong Kong PMI reports are scheduled. In Europe, French merchandise trade and Italian retail sales are on tap. In North America, US NFIB Small Business Optimism and US international trade in goods & services reports are on tap.

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