Daily market review

United States

US equities retreated, with many growth stocks that advanced Monday leading Tuesday's selloff. Most equity sectors fell and US Treasury yields surged. The Dow Jones industrial average declined 0.8 percent, the S&P 500 fell 1.3 percent and the NASDAQ fell 2.3 percent.

Hawkish comments from Lael Brainard, a Fed governor previously known for her dovish views, weighed on risk sentiment, after Brainard repeated that she sees upside risks to inflation and the Fed was prepared to act more aggressively to curb inflation if warranted by economic data, including a possible faster runoff in the Fed's balance sheet.

FANMAG stocks were among the day's laggards, including Apple, down 1.9 percent, Amazon, down 2.6 percent, and Netflix, down 2.9 percent. Chinese tech stocks that rallied Monday fell back Tuesday, with Alibaba down 5.5 percent and Pinduoduo down 5.0 percent. Other weak sectors included autos & parts, technology, banks, and homebuilders. Holding up better were rails, big pharma, grocery stores, and cruise lines.

Among stocks in focus, Twitter extended Monday's gains, up 2.0 percent, after Elon Musk was named to its board of directors after he became the biggest shareholder in the social media leader. On the downside, Starbucks fell 4.5 percent after an analyst downgrade.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$3.03 to US$104.90 while spot gold fell US$12.58 to US$1,920.16. The US dollar rose vs. most major currencies. The US Treasury 30-year bond yield rose 12 basis points to 2.58 percent and the 10-year note yield rose 16 basis points to 2.56 percent.


Equities were mixed to lower with French markets weakest headed into the weekend's presidential elections amid concern over rising poll numbers for far-right firebrand Marine Le Pen. The Europe-wide STOXX 600 rose 0.2 percent, the German DAX declined 0.7 percent, the French CAC lost 1.3 percent and the UK FTSE 100 was up 0.7 percent.

News that Europe and the US are considering a new round of sanctions on Russia weighed on risk appetite. Rising inflation readings flowing from the Ukraine crisis in regional purchasing managers reports added to the gloomy narrative on the outlook for growth and corporate profits.

Banks and autos & parts lagged with Renault off 6.2 percent after reports the automaker is considering spinning off its electric vehicle unit. Santander, the bank, slipped 1.6 percent after announcing changes in its accounting practices. Societe Generale fell 5.6 percent after its rival, ING, stepped up its business in France.

On the positive side, utilities got a lift from news that power companies Repsol, up 2.6 percent, and Orsted, up 3.4 percent, would team up on wind projects in Spain. Vestas Wind Systems, the wind power business, rose 8.6 percent after an upgrade at Credit Suisse. Carnival, the cruise line, rose 4.1 percent after bookings surged in the last week of March.

Asia Pacific

Asia-Pacific equities firmed but activity was limited by holidays in Greater Chinese markets, plus Taiwan.

Japanese equities were mixed with most sectors weaker. The Nikkei 225 firmed 0.2 percent but the wider TOPIX eased 0.2 percent as growth stocks tracked Monday's gains in US growth stocks while value stocks retreated. Worst sectors included marine transportation, insurance, banking, and iron & steel. Best were miners, retail, and land transportation.

The South Korean KOSPI firmed 0.1 percent. The Indian BSE Sensex slipped 0.7 percent.

Australian equities gave back most initial gains after a hawkish policy statement from the Reserve Bank of Australia. The All Ordinaries index rose 0.2 percent. Energy stocks outperformed as oil prices bounced back on rising expectations for more sanctions on Russia. Technology and utilities advanced too, while materials, real estate, and industrials lagged.

In economic news, the RBA left rates unchanged and reiterated that the inflation outlook remains uncertain, but policy-makers removed the word "patient" from their forward guidance on interest rates, which markets judged to mean a rate increase is coming in June, to be followed by a series of rate increases.

Looking ahead*

In Asia/Pacific, Hong Kong PMI, India PMI, and Chinese PMI composite figures are due. In Europe, reports on German manufacturers' orders, UK PMI construction, and Eurozone PPI reports are due. In North America, the Canadian Ivey PMI report and the FOMC minutes are on tap.

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