Daily market review

United States

Equities rebounded Wednesday on hopes for progress in Thursday's Russia-Ukraine talks and a stunning 10 percent drop in oil prices. Risk assets appeared oversold after days of steep losses, and buyers were drawn back into the market as the rally unfolded. The Dow Jones industrial average rose 2.0 percent, the S&P 500 gained 2.6 percent and the NASDAQ rose 3.6 percent.

Investors will be watching carefully for any results from the Ukraine talks to see if the rally can be sustained, and for follow-up on reports that some oil exporters may step up sales to offset missing Russian output. They will also watch results from the European Central Bank governing council meeting and US consumer price figures due Thursday.

Best performing equity sectors included technology, communications services, financials, and consumer discretionary, with energy and utilities faltering. Airlines rebounded as fuel prices fell back. Financials recovered, including American Express, up 5.4 percent, and JP Morgan, up 4.0 percent, amid hopes that global recession can be avoided with diplomatic progress on Ukraine. Tech stocks outperformed as market sentiment improved and investors found bargains in stocks including Nvidia, up 7 percent, and PayPal, up 5.6 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil dropped US$15.46 to US$112.87 while spot gold plunged US$58.50 to US$1992.46. The US dollar was mixed against major currencies. Yields on the US Treasury 30-year bond rose 8 basis points to 2.31 percent and the 10-year note rose 9 basis points at 1.94 percent.


Plunging oil prices and hopeful noises about upcoming Russia-Ukraine talks propelled brisk bargain-hunting to lift equities. The Europe-wide STOXX 600 surged by 4.7 percent, the German DAX jumped 7.9 percent, the French CAC gained 7.1 percent and the UK FTSE 100 was up 3.3 percent.

Beaten-up sectors including banks, autos, travel & leisure, and technology fared best while energy and basic resources lagged on the remarkable retreat in oil and other commodities prices. Oil prices fell back as positions appeared over-extended to the upside, plus fundamental news, including word that International Energy Agency member countries were prepared to release more oil reserves, and hopes for other measures to boost supplies.

Among companies in the news, Adidas rose 13 percent after raising its guidance on better business conditions in China. Deutsche Post gained 12 percent on a profits beat and share buyback, Salvatore Ferragamo gained on a profits beat, and BNP Paribas rose 10 percent after reporting low exposure to Russia and Ukraine. Airbus gained 9.6 percent on better-than-expected aircraft deliveries.

Asia Pacific

Asia-Pacific equities ended mixed amid bargain hunting after a retreat in oil and other commodities amid hopes for Russia-Ukraine talks. Offsetting negatives included bearish China news and lingering Ukraine worries.

Chinese stocks were hit by news that Norway's sovereign wealth fund was pulling its investment in Li Ning, the sportswear company, on allegations that the firm used forced labor in the Xinjiang province. Chinese stocks also reacted badly to US threats to sanction Chinese firms doing business with Russia. The CSI 300 index lost 0.9 percent and the value-stock heavy Shanghai composite declined 1.1 percent. Hong Kong's Hang Seng index fell 0.7 percent.

Japan's Nikkei 225 eased 0.3 percent and the broader TOPIX declined 0.1 percent as early dip buying gave way to renewed weakness with basic resources, pharma, utilities, and precision instruments lagging.

The Taiwan Taiex rose 1.1 percent and the Indian BSE Sensex gained 2.3 percent. South Korea's markets were closed Wednesday for the presidential election day.

Australian equities improved on dip-buying in hard hit bank, technology, and consumer stocks, with the All Ordinaries index up 1.1 percent. Underlying sentiment remained shaky on concerns about rising inflation, higher interest rates, and fallout from the Ukraine conflict.

Looking ahead*

In Asia/Pacific, Japanese PPI figures are scheduled. In Europe, the ECB policy announcement and Italian PPI report are due. In North America, the US CPI, US jobless claims, and US Treasury statement reports are on tap.

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