Daily market review

United States

Risk-on returned Wednesday, with support from cautious comments from Federal Reserve Chair Jerome Powell, and as stocks appeared oversold after heavy losses. The Dow Jones industrial average rose 1.8 percent, the S&P 500 gained 1.9 percent and the NASDAQ rose 1.6 percent.

Powell affirmed he would ask for a 25-basis point rate increase at the Fed's policy meeting in two weeks, but expressed caution about fallout from the Ukraine crisis and suggested the Fed would move cautiously after its initial modest rate hike. Upbeat US economic data, which suggested the economy remains robust, contributed to the better tone, including the ADP employment report which showed private jobs rose 475,000 in February, well above expectations.

Investors seized on headlines suggesting Russian and Ukrainian officials were prepared to resume talks, as some investors bought into the narrative that oil prices are peaking and the Ukraine crisis will recede. Bond yields rebounded sharply as cyclicals rallied, including financials, materials, and industrials, as investors moved back into stocks.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$8.32 to US$113.92 while spot gold fell US$18.03 to US$1,926.84. The US dollar was mixed against major currencies. Yields on the US Treasury 30-year bond jumped 16 basis points to 2.27 percent and the 10-year note rose 15 basis points at 1.88 percent.


Rising prices for oil & gas and other commodities and a better showing on Wall Street Wednesday lifted European equities. The Europe-wide STOXX 600 rose 0.9 percent, the German DAX gained 0.7 percent, the French CAC gained 1.6 percent and UK FTSE 100 rose 1.4 percent.

Another upside surprise on inflation, the record 5.8 percent rise in Eurozone HICP in February from a year earlier, added to the European Central Bank's dilemma in confronting the deflationary shock from the Ukraine crisis.

Energy and miners were among the top performers, followed by media, industrials, banks, and real estate. Lagging were utilities, autos & parts, food & beverage, and health care.

Among companies, BP rose 5.1 percent and Royal Dutch Shell gained 5.3 percent as oil prices continued to rally. Technology shares got a lift from declining interest rates on the Ukraine shock, with SAP, the German software giant, up 3.5 percent.

Markets remained focused on the impact of anti-Russia sanctions, and companies adjusted to the increasing isolation of Russia from global markets. Maersk, the Danish shipping giant, was up 3.7 percent after announcing it will halt container shipping to and from Russia.

Asia Pacific

A selloff on Ukraine worries carried over Wednesday from Tuesday's Wall Street trading as oil prices continued higher and Ukraine fighting intensified. Growth stocks lagged as investors dumped highly-valued companies on concern about the impact of anti-Russia sanctions.

Tech and consumer discretionary led Chinese stocks lower as the CSI 300 index lost 0.9 percent and the value-stock heavy Shanghai composite slipped 0.1 percent. Highly-valued tech stocks and electric vehicles lagged in Hong Kong as the Hang Seng index dropped 1.8 percent. Uncertainty over the Hong Kong government's plans to impose restrictions or other steps to cope with rising Covid-19 deaths added to negative sentiment.

The Taiwan Taiex fell 0.2 percent and the South Korean KOSPI rose 0.2 percent. Bank stocks led Indian equities lower with the BSE Sensex down 1.4 percent.

Japan's Nikkei 225 fell 1.7 percent and the TOPIX dropped 2.0 percent on worries that global demand will suffer from the Ukraine shock. Exporters including automakers Honda, down 4.5 percent, and Toyota, down 4.4 percent, led the decline.

The Australian All Ordinaries index rose 0.3 percent with support from rising oil and commodities prices. Bank stocks continued lower to offset strength elsewhere, and worries about rising inflation and supply chain disruptions weighed broadly on risk appetite.

Looking ahead*

In Asia/Pacific, reports on South Korean GDP, Hong Kong PMI, Japanese PMI composite final, Australian goods & services trade, Singapore PMI, Chinese PMI composite, are scheduled. In Europe, reports on Swiss CPI, French PMI composite final, German PMI composite final, Eurozone PMI composite, UK PMI composite final, Eurozone PPI, Eurozone unemployment rate, and European Central Bank minutes are due. In North America, US jobless claims, US productivity & costs, US PMI composite final, US factory orders, and US ISM services index reports are on tap.

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