Daily market review

United States

Equities gave back some recent gains and commodities prices rebounded Wednesday as Tuesday's hopes for near-term progress in Russia-Ukraine talks faded. Stepped-up Russian attacks around Kyiv and other Ukrainian cities and comments from Russian and Ukrainian officials downplaying progress toward a settlement dashed expectations for a ceasefire that emerged Tuesday. The Dow Jones industrial average slipped 0.2 percent, the S&P 500 declined 0.6 percent and the NASDAQ lost 1.2 percent.

Most sectors fell back, especially technology and consumer discretionary, which benefited most on Tuesday from headlines suggesting progress in peace talks. Energy and basic materials outperformed Wednesday on concern over supply disruptions flowing from the Ukraine conflict. Another batch of hawkish comments from Federal Reserve officials, including Federal Open Market Committee voter Esther George, renewed expectations for a series of 50-basis point rate increases from the Fed, starting in May.

The FANMAG complex, which led to the upside Tuesday, led to the downside Wednesday, along with luxury goods, retail, housing stocks, and banks. Some analysts described the S&P's four-day run of gains as a bear-market bounce, and focused attention on the inverting US Treasury yield curve, which has signaled recession in the past.

Among companies in focus, Restoration Hardware dropped 13 percent after warning of slowing demand since the Ukraine crisis started. PVH, the clothing brand, lost 6.5 percent after issuing weak guidance. Crane, the maker of bathroom fixtures, eased 0.1 percent after saying it will split into two companies. On the positive side, railway Norfolk Southern chugged ahead by 1.2 percent after announcing a share buyback. Paychex, the human resources firm, gained 3.3 percent on an earnings beat and better guidance.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.49 to US$112.55 while spot gold rose US$15.97 to US$1,935.67. The US dollar declined vs. most major currencies. The US Treasury 30-year bond yield fell 3 basis points to 2.47 percent and the 10-year note yield lost 5 basis points to 2.35 percent.


Equities gave back some of Tuesday's gains amid disappointment that positive headlines on Russia-Ukraine negotiations came into doubt Wednesday. The Europe-wide STOXX 600 dipped 0.4 percent, the German DAX fell 1.5 percent, the French CAC lost 0.7 percent and the UK FTSE 100 was up 0.6 percent.

Commodity sectors that sold off Tuesday rebounded Wednesday, including energy and basic resources, which helped UK stocks outperform. Tuesday's winners lagged, including retail, travel & leisure, autos, industrials, construction, and banks. News that Germany and Austria were warning of natural gas rationing added to the bearish mood, along with German and UK inflation readings topping expectations.

Autos were under pressure as the war trade resumed, with Renault off 3.9 percent on reports it may divest its Russian unit, AvtoVAZ. Basler, the computer imaging technology firm, lost 5.5 percent on disappointing results. On the positive side, Grammer, another auto parts maker, rose 6.6 percent after an earnings beat.

Asia Pacific

Asia-Pacific equities were mostly higher, with Chinese markets leading, while Japan lagged as a slight uptick in the yen vs. the dollar weighed on the outlook for exporter profits.

Hopes for progress on Ukraine peace talks and expectations for Chinese policy stimulus bolstered Chinese equities. Property and banking stocks advanced after reports suggesting regional Chinese regulators would ease restrictions on property prices. The Chinese CSI 300 index gained 2.9 percent and the Shanghai index rose 2.0 percent. Hong Kong stocks lagged as tech stocks weakened, with the Hang Seng index ending up 1.4 percent.

Yen strength and outflows from stocks entering their ex-dividend period undercut Japanese markets. A weaker-than-expected Japanese retail sales report added to negative sentiment. Japan's Nikkei 225 lost 0.8 percent and the wider TOPIX lost 1.2 percent. Most sectors weakened, with banks, automakers, marine transportation, and natural resources off the most.

The Taiwan Taiex gained 1.1 percent and the South Korean KOSPI firmed 0.2 percent. The Indian BSE Sensex rose 1.3 percent.

Australian equities tracked US markets higher with growth stocks outperforming as they did on Wall Street. The All Ordinaries index rose 0.7 percent with technology, health care, and industrials leading and energy and materials lagging.

Looking ahead*

In Asia/Pacific, South Korean industrial production, South Korean retail sales, Japanese industrial production, and Chinese CFLP PMI manufacturing figures are scheduled. In Europe, reports on German retail sales, UK GDP, Swiss retail sales, French consumer manufactured goods consumption, French CPI, French PPI, German unemployment rate, Eurozone unemployment rate and Italian CPI are due. In North America, Canadian monthly GDP, US jobless claims, US personal income and spending, and Chicago PMI reports are on tap.

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