Daily market review

United States

An early equities advance powered by optimism about Russia-Ukraine talks faltered as traders sold into early strength amid skepticism the talks would bear fruit. The Dow Jones industrial average was flat, the S&P 500 lost 0.7 percent and the NASDAQ dropped 2.0 percent.

More signs that Russia was intensifying its attacks attracted negative attention, along with UN Secretary-General António Guterres's comment that nuclear war is "within the realm of possibility" in the conflict. A fourth round of Ukraine talks adjourned Monday until Tuesday with no progress reported after weekend comments from both sides raised hopes for progress.

Plunging oil prices undercut energy stocks. Commodities weakened amid renewed Covid worries in China, and shutdowns of major Chinese industrial facilities. Growth stocks lagged with the FANMAG complex under renewed pressure as interest rates rebounded. Worst sectors included technology, communications services, and consumer discretionary. Homebuilders suffered from rising interest rates. On the positive side, financials outperformed. Vaccine names benefited as investors reacted to the China Covid situation.

Among companies in focus, Apple declined 2.7 percent amid concern over closure of chipmaking facilities in China due to Covid, and Wynn Resorts fell 7.5 percent on its China exposure. Among other leading decliners, Nike fell 4.1 percent and Intel lost 3.1 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$6.49 to US$106.06 while spot gold fell US$31.33 to US$1,953.00. The US dollar was mixed vs. major currencies. Yields on the US Treasury 30-year bond surged 12 basis points to 2.48 percent, and the 10-year note jumped 14 basis points at 2.14 percent.


Hopes for progress in Russia-Ukraine talks boosted equities Monday. The Europe-wide STOXX 600 gained 1.2 percent, the German DAX rose 2.2 percent, the French CAC gained 1.8 percent, and the UK FTSE 100 was up 0.5 percent.

Best sectors included autos & parts and financials while oil & gas, miners, and precious metals were notable decliners as commodities prices retreated. Among autos, Volkswagen gained 2.5 percent on an earnings beat and better guidance, and Porsche tracked VW higher by 3.7 percent. Renault gained 0.8 percent after announcing it will continue its business in Russia. Among banks, Deutsche Bank rallied 8.6 percent after an upgrade at Berenberg. Commerzbank gained 4.8 percent after saying it will exit its Russia business. Deutsche Boerse gained 4.5 percent.

Companies with China exposure were hurt by lockdowns and other restrictions in China in connection with rising Covid cases. BHP, the miner, fell 4.8 percent, and Richemont, the luxury goods group, fell 2.4 percent.

Among companies in the news, Rio Tinto, the miner, fell 4.1 percent after bidding to acquire Turquoise Hill, a competitor. Prosus, the investment group, fell 10 percent after news that Tencent, one of its holdings, could be hit by huge fines for violating Chinese anti-money laundering rules.

Asia Pacific

Asia-Pacific equities were mixed with most markets higher on optimism over prospects for diplomatic talks in the Ukraine conflict. Chinese markets dropped on Covid worries and concern over US allegations that Russia asked China to provide military equipment to support its invasion of Ukraine.

Chinese stocks tanked on news of anti-Covid lockdowns in Shenzhen and other Chinese manufacturing centers, plus concerns linked to US statements that Russia was seeking military equipment and other support in its Ukraine action. Worsening US-China relations are expected to mean more sanctions on Chinese businesses. The CSI 300 index dropped 3.1 percent and the Shanghai composite lost 2.6 percent. Meanwhile, Hong Kong's Hang Seng index fell 5.0 percent with tech stocks hit hardest on concerns over US sanctions. Tencent dropped 9.8 percent on news after a Wall Street Journal report that the firm may face big fines for regulatory violations.

Japanese markets perked up on hopes for progress in Russia-Ukraine talks but gains were limited by caution as the conflict widened over the weekend. The Nikkei 225 rose 0.6 percent and the broader TOPIX rose 0.7 percent with gains across most sectors. Autos, transportation, and financials outperformed while utilities and retail stocks lagged.

The Taiwan Taiex was flat, the South Korean KOSPI fell 0.6 percent but the Indian BSE Sensex rose 1.7 percent.

Australian equities got a lift from positive noises in Russia-Ukraine talks, with the All Ordinaries index up 1.1 percent. Financials, consumer staples, health care, telecom, and consumer discretionary led the winners while materials, energy, and utilities lagged.

Looking ahead*

In Asia/Pacific, Australian residential property prices, Reserve Bank of Australia meeting minutes, Chinese fixed asset investment, Chinese industrial production and Chinese retail sales reports are scheduled. In Europe, the UK Labour Market Report, Swiss producer prices, French CPI, German ZEW survey and Eurozone industrial production reports are due. In North America, Canadian housing starts, US PPI, US Empire State manufacturing, US Treasury TICs, and Canadian manufacturing sales reports are on tap.

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