Daily market review

United States

Stocks extended their recent rout Monday as investors fear an earnings recession on inflation stoked by surging prices for oil and other key commodities, along with more supply chain disruptions, both flowing from the Ukraine war. The Dow Jones industrial average dropped 2.4 percent, the S&P 500 lost 3.0 percent and the NASDAQ plunged 3.6 percent.

Risk assets took another leg down after last week's losses as buyers remained scarce. Equities eroded through the day as heavy fighting continued in Ukraine, the US considered stepped up sanctions to include Russian energy, and prospects for Ukraine-Russia diplomatic efforts remained uncertain.

Concern that consumers will cut back hit consumer stocks, including Amazon, off a shocking 5.6 percent. Financials tanked, with credit card stocks off the most, including American Express off 8.0 percent. Banks got whacked, including Bank of America, down 6.4 percent. Airlines tumbled, including United Airlines down 15 percent. On the positive side, aerospace & defense, energy, and precious metals outperformed on the war trade. Among oil services firms, Schlumberger was a leader, up 8.1 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil jumped US$4.64 to US$123.36 while spot gold rose US$21.22 to US$1,998.78. The US dollar advanced against major currencies. Yields on the US Treasury 30-year bond rose 1 basis point to 2.18 percent and the 10-year note rose 4 basis points at 1.78 percent.


News that Russian and Ukrainian diplomats would meet Thursday helped European equities recover from opening lows but major indexes still ended weaker. Investors continued to price in declining company profits in response to rising inflation, more supply chain disruptions, and slowing demand on Ukraine effects. The Europe-wide STOXX 600 lost 1.1 percent, the German DAX fell 2.0 percent, the French CAC declined 1.3 percent, and UK FTSE 100 was down 0.4 percent.

Energy stocks outperformed to cushion the decline as oil prices extended recent gains amid concern that the US and its allies might ban imports of Russian oil and gas, but oil prices came off the day's highs after German Chancellor Olaf Scholz rejected calls for such a ban. BP rose 1.4 percent and Royal Dutch Shell, which is continuing to operate in Russia, gained 0.9 percent.

On the downside, banks lagged on worries about losses on Russian exposure, including Credit Agricole, down 24 percent and Societe Generale, down 4.2 percent. LVMH, the luxury goods seller, lost 1.7 percent after announcing it will suspend business at its 124 stores in Russia. Airlines were hit hard, including Wizz Air, down 7 percent, after halting some flights to Russia, Ukraine and Moldova.

Market reacted favorably to news that German manufacturers' orders rose for a third straight month in January. A 1.8 percent monthly increase was double the market consensus after a steeper revised 3.0 percent jump in December.

Asia Pacific

Asia-Pacific equities markets were hammered again on fallout from the Russia-Ukraine conflict, with oil prices surging further on reports the US and its allies were discussing a ban on Russian oil imports. Energy stocks and basic resources held up best.

Japan's Nikkei 225 fell 2.9 percent and the broader TOPIX declined 2.8 percent on the Ukraine trade. Growth stocks lagged, with automakers and airlines among the worst hit, along with banks, textiles, instruments, and metal products.

Growth stocks led mainland Chinese stocks sharply lower as the CSI 300 index dropped 3.2 percent and the value-stock heavy Shanghai composite lost 2.2 percent. Technology, consumer, and banking stocks lagged the most. Hong Kong's Hang Seng index plunged 3.9 percent, with health care, consumer, and financials leading the selloff. Property and oil & gas stocks were the only sectors rising.

The Taiwan Taiex lost 3.9 percent, the South Korean KOSPI fell 2.3 percent, and the Indian BSE Sensex dropped 2.7 percent amid widespread risk aversion.

Strength in energy and mining stocks limited the downside for Australian equities but the global flight from risk hit other sectors, with the All Ordinaries index down 1.0 percent. Hardest hit were technology, health care, telecom, and industrials.

Looking ahead*

In Asia/Pacific, report on Chinese new yuan loans, Taiwan CPI, and Taiwan external trade are scheduled. In Europe, reports on German industrial production, Italian retail sales, and Eurozone GDP are due. In North America, US NFIB small business sentiment, US international trade in goods and services, Canadian merchandise trade, and US wholesale inventories reports are on tap.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies