Daily market review

United States

Disappointment over lack of progress toward peace in Ukraine and poor company news weighed on equities Thursday, with growth stocks lagging. The Dow Jones industrial average declined 0.3 percent, the S&P 500 lost 0.5 percent, and the NASDAQ declined 1.6 percent.

Investors hoping for a ceasefire after the day's Russia-Ukraine talks had to settle for news that the two sides had agreed to limited humanitarian measures for civilians, and that the two sides would meet again.

Sentiment derived limited support as oil prices came off recent highs on hopes that Iran and Western allies had agreed on a nuclear deal, but sentiment suffered after no deal was announced. Meanwhile, cyclical sectors that rallied Wednesday retreated Thursday, including retail, travel & leisure, autos, restaurants, and homebuilders. Banks fell back too, with Citigroup a notable decliner, down 3.2 percent.

Growth stocks lagged as cloud and software weighed on technology after poor quarterly results from Snowflake, down 16 percent, and Veev, down 16 percent. Big chipmaker Intel lost 1.9 percent after an analyst downgrade. Among consumer discretionary stocks, notable losers included Amazon, down 2.7 percent, and Tesla, off 4.6 percent.

On the positive side, precious metals and industrial metals outperformed on rising commodities prices. Other relative outperformers included defensive sectors, such as consumer staples and health care.

US economic data played into the negative narrative as the Institute for Supply Management's services index missed expectations, and the ISM said growth slowed as a result of supply chain and logistical problems, rising prices, and staffing shortages.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$3.26 to US$110.66 while spot gold rose US$9.78 to US$1,936.84. The US dollar was mixed against major currencies. Yields on the US Treasury 30-year bond declined 4 basis points to 2.23 percent, and the 10-year note fell 3 basis points at 1.85 percent.


Ukraine worries hit European equities again as commodity prices rose and stagflation fears increased. The Europe-wide STOXX 600 dropped 2.0 percent, the German DAX lost 2.2 percent, the French CAC fell 1.8 percent, and UK FTSE 100 plunged 2.6 percent.

Disappointment over lack of progress in Russia-Ukraine peace talks hit risk assets, along with gloomy comments from French President Emmanuel Macron after a telephone call with Russian President Vladimir Putin.

Equities also reacted badly to reports showing Russia was making progress in its assault, with refugees fleeing to the West in huge numbers. Oil prices retreated from recent highs amid speculation that Iran may soon reach a nuclear deal with the West and restore its oil output to global markets.

Equity losses were nearly across the board with markets pricing in heavy demand destruction and the prospect of recession on rising oil prices. Travel & leisure suffered as airlines plunged on travel disruptions and rising fuel costs. Other big losers included retail, autos & parts, oil & gas, utilities, and media. European banks were notable losers on their heavy exposure to expected Russian default. Highly-valued growth stocks including technology fell as investors pared positions.

On the positive side, basic resources managed gains amid surging commodity prices. Glencore, the miner, rose 5.2 percent, and BHP was up 1.2 percent in London dealings.

Asia Pacific

Follow-through from Wednesday's strength on Wall Street lifted most Asia-Pacific equities with value stocks leading. Investors reacted favorably to comments from Fed Chair Jerome Powell, who suggested the Fed would proceed cautiously as it raises interest rates.

Japan's Nikkei 225 rose 0.7 percent and the Topix rose 1.2 percent with gains nearly across the board. Value stocks outperformed, including banks, natural resources, and marine shipping.

A mixed sector showing left mainland Chinese stocks lower as the CSI 300 index lost 0.6 percent and the value-stock heavy Shanghai composite eased 0.1 percent. Growth stocks retreated while value advanced. Hong Kong followed a similar pattern as the Hang Seng index gained 0.6 percent, with internets and tech stocks lagging while property and energy stocks advanced.

The Taiwan Taiex rose 0.4 percent and the South Korean Kospi jumped 1.6 percent as investors liked the Powell comments. Big tech companies led the gains, including Samsung, up 1.7 percent, and SK Hynix, up 3.2 percent.

Indian equities were mixed with the BSE Sensex down 0.7 percent. Banks, autos, and other financials rose fell while metals, tech, and oil & gas outperformed.

The Australian All Ordinaries index rose 0.6 percent with support from more gains in oil and other commodities prices. Materials, energy, and utilities advanced while tech, consumer staples, and health care lagged.

Looking ahead*

In Asia/Pacific, reports on South Korean CPI, Indian PMI composite, and Japanese unemployment rate are scheduled. In Europe, reports on German merchandise trade, French industrial production, Italian GDP, UK PMI construction, and Eurozone retail sales are due. In North America, US employment situation and Canadian Ivey PMI reports are on tap.

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