Daily market review

United States

Equities gave back the week's gains Thursday after another upside surprise on US inflation and hawkish Federal Reserve comments. The Dow Jones industrial average fell 1.5 percent, the S&P 500 lost 1.8 percent, and the NASDAQ dropped 2.1 percent. Canada's S&P/TSX slipped only slightly, down 0.3 percent despite escalating supply disruptions by anti-mandate truckers.

US equities dipped at the open on news that the US consumer price index topped expectations with a year-over-year gain of 7.5 percent in January, its highest since 1982. Selling intensified after St. Louis Fed President James Bullard, a recent hawk, told Bloomberg that the CPI data rendered him "dramatically" more hawkish. Bullard called for 100 basis points of rate increases by July 1, and for the Fed to start shrinking the Fed's balance sheet in the second quarter. US Treasury yields jumped, with the two-year note up an eye-popping 25 basis points on the day, and the 10-year yield reaching 2.05 percent.

Growth stocks suffered the most, with information technology, consumer discretionary, real estate, and utilities lagging. Index heavyweights Microsoft fell 2.8 percent and Apple lost 2.3 percent to end at the day's lows. Holding up best were financials, energy, and materials. Strong earnings reports lifted some large value stocks, including Disney, up 3.4 percent, Mattel, the toymaker, up 7.7 percent, and Coca-Cola, up 0.5 percent.

Among other stocks in the news, Sonos, the sound system maker, rose 4.5 percent on blowout results, and Twilio, the software company, gained 1.8 percent after an earnings beat and better guidance. On the downside, Uber fell 6.1 percent despite a revenues beat, and Pepsico declined 2.1 percent after warning of cost pressures hitting profits.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell by 53 cents to US$91.22 while spot gold fell US$5.94 to US$1,827.25. The US dollar firmed vs. major currencies. Yields on the US Treasury 30-year bond jumped 9 basis points to 2.34 percent, and the 10-year note surged 11 basis points to 2.05 percent.


Equities were split amid mixed earnings news, with inflation concerns in focus. The Europe-wide STOXX 600 declined 0.2 percent, the German DAX edged up 0.1 percent, the French CAC slipped 0.4 percent, and the UK FTSE 100 was up 0.4 percent.

Travel & leisure, miners, and chemicals advanced, mostly offset by weakness in technology, personal & household goods, and financial services. Gambling stocks boosted travel & leisure after upbeat results from Fischer Sports Betting, up 1.2 percent. Hotels were supported by Scandic Hotels, up 6.4 percent on an earnings beat.

On the downside, Unilever, down 1.3 percent, weighed on personal & household goods after warning that rising costs will hurt 2022 profits. Credit Suisse dropped 6.6 percent after an earnings miss and warning over restructuring costs.

Among companies in focus, AstraZeneca rose 1.6 percent after raising its guidance and dividend. Siemens, the industrial conglomerate, gained 4.5 percent on an earnings beat and better guidance.

Asia Pacific

Asia/Pacific markets were mixed in cautious trading pending the US consumer prices report.

Hong Kong's Hang Seng index rose 0.4 percent with property stocks better on a report that China Evergrande, up 5.4 percent, was not planning a firesale of its assets, as it had been feared.

China's CSI 300 index edged up 0.3 percent and the value-stock heavy Shanghai composite firmed 0.2 percent. Among sectors, real estate and energy fared best while health care and industrials lagged.

The Taiwan Taiex rose 1.0 percent and the South Korean KOSPI was up 0.1 percent as technology stocks perked up. Gains in tech, financials, and real estate lifted Australian equities with the All Ordinaries index and the ASX 200 both up 0.3 percent.

Japanese equities improved with automakers, shipping, and precision instruments stocks best. The Nikkei 225 rose 0.4 percent while the Topix rose 0.5 percent. Equities ended well down from early highs as traders trimmed risk headed into the US CPI.

Indian equities improved for a third day with the Sensex 30 up 0.8 percent. As expected, the Reserve Bank of India left policy on hold. Best were consumer goods, financials, tech, and metals, while energy stocks lagged.

Looking ahead*

In Asia/Pacific, Taiwan CPI and External Trade reports are due as is Indian Industrial Production. In Europe, German and Swiss CPI reports will be posted as well UK GDP, UK Industrial Production and UK Merchandise Trade. In North America, US Consumer Sentiment is scheduled.

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