Daily market review

United States

Equities ended mostly higher Friday with value stocks outperforming while growth stocks lagged as US market interest rates surged again. Equities appeared to catch a bid late in the day to help the NASDAQ recover from its midday lows. The Dow Jones industrial average rose 0.4 percent, the S&P 500 gained 0.5 percent and the NASDAQ declined 0.2 percent.

The yield curve continued to flatten Friday, with the US Treasury two-year note yield up 16 basis points on Friday alone, after a series of hawkish comments from Federal Reserve officials this week, starting with Fed Chair Jerome Powell's pledge on Monday to move rates faster into restrictive territory if needed to rein in inflation. The FANMAG complex mostly retreated Friday, as did software, technology hardware, biotech, homebuilders, autos, and restaurants.

Banks outperformed on rising rates, and defense stocks advanced again on the war trade. Energy, food, airlines, insurance, and pharma also beat the market Friday. Among stocks in focus, Teva, the pharma, rose 5.6 percent on an analyst upgrade, and Cutera, the medical device maker, rallied 21 percent on positive clinical news on its acne treatment.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.18 to US$119.28 while spot gold fell US$8.18 to US$1,954.95. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield rose 5 basis points to 2.60 percent, and the 10-year note yield rose 12 basis points to 2.48 percent.


Equities were narrowly mixed, with most sectors higher, and mixed company news. The Europe-wide STOXX 600 firmed 0.1 percent, the German DAX rose 0.2 percent, the French CAC was flat and the UK FTSE 100 firmed 0.2 percent.

With an evident stalemate in the Ukraine situation, markets focused again on supply disruptions and other fallout from the conflict, including a much worse than expected German Ifo report on business sentiment, and a series of hawkish statements from Federal Reserve officials this week appearing to signal more aggressive rate increases in May and afterwards.

Among sectors, energy and basic materials outperformed on rising commodities prices, and real estate and technology in particular derived support as European rates edged back after their run-up this week. Retail got a lift from Next, the UK chain store, up 1.2 percent after an analyst upgrade, and Wickes, the retailer, rose 4.4 percent after an earnings beat.

On the downside, industrial machinery and construction & supplies lagged. Husqvarna, the maker of outdoor power tools, fell 4.5 percent after warning of supply chain trouble.

Asia Pacific

Asia-Pacific equities were mixed Friday with China off sharply on renewed concern over the impact of US audit requirements on Chinese firms listed in the US.

Chinese stocks fell after the Financial Times reported the US Public Company Accounting Oversight Board said it was unclear whether Chinese regulators would allow Chinese firms to release enough information to meet US requirements for listing. Market sentiment appeared shaky as investors are still waiting for the government to back up recent pledges to provide additional policy support, and Covid cases rose in Shanghai and other cities.

The Chinese CSI 300 index fell 1.8 percent and the Shanghai index lost 1.2 percent. The Hong Kong Hang Seng index dropped 2.5 percent with health care, internet, and technology stocks lagging.

Japanese markets started stronger after tech stocks advanced during the Wall Street hours, but trimmed gains on profit-taking. Japan's Nikkei 225 rose 0.1 percent and the wider TOPIX was unchanged. Autos and banks lagged while marine shipping, agriculture, and pharma stocks fared best.

The Taiwan Taiex declined 0.1 percent and the South Korean KOSPI was flat. The Indian BSE Sensex declined 0.4 percent.

Commodities strength helped Australian equities edge up to end the week higher. Weakness in bank stocks offset gains elsewhere. The All Ordinaries index firmed 0.3 percent. Materials, energy, utilities, and industrials were winners while health care, financials, real estate, and information technology lagged.

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