Daily market review

United States

Rising market interest rates weighed on equities Monday with growth and momentum stocks lagging. Value stocks sold off into the close as the market mood soured. The Dow Jones industrial average fell 1.2 percent, the S&P 500 lost 1.7 percent and the NASDAQ dropped 2.2 percent.

FANMAG stocks had a bad day, with Apple off 2.6 percent. Chipmakers led technology down, including Nvidia, off 5.2 percent after an analyst downgrade. Other laggards included energy, with oil prices falling on concern that anti-Covid shutdowns in China will stall demand.

Health care stocks lagged as they gave back some recent gains. Consumer discretionary stocks softened, with Amazon off 2.2 percent and Tesla down 4.8 percent. On the upside, industrials held up relatively well, with agricultural machinery and airlines better. Some banks managed gains on rising rates with Wells Fargo up 1.2 percent. Others faltered in the afternoon with Citigroup ending down 0.6 percent.

Among other stocks in focus, Twitter rose 1.7 percent as the market remained fascinated with Elon Musk's new stake in the social media firm. JetBlue and Alaska Airlines both rose 1.1 percent after announcing flight cutbacks this summer. On the downside, Nio, the Chinese electric vehicle maker, declined 1.6 percent after postponing deliveries due to the shutdown of its factory in Shanghai.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$3.26 to US$98.64 while spot gold rose US$10.48 to US$1,953.82. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield rose 10 basis points to 2.83 percent and the 10-year note yield rose 9 basis points to 2.79 percent.


Fast-rising bond yields and another selloff on Wall Street depressed equities though French markets outperformed on relief over French election results. The Europe-wide STOXX and the German DAX both 600 declined 0.6 percent, the French CAC firmed 0.1 percent, and the UK FTSE 100 lost 0.7 percent.

The rapid pace of the selloff in US and European bond markets attracted unpleasant market attention and weighed in particular on highly-valued growth stocks. Markets are increasingly pricing in faster rate hikes from the European Central Bank this year alongside even more rapid rate increases from the Federal Reserve.

On the positive side, French equities outperformed regional markets after French President Emmanuel Macron's narrow victory in the first round of presidential elections on Sunday and polls showing he is likely to prevail in the run-off vote.

Among sectors, worst hit were technology, personal and household goods, industrials, utilities, ad basic resources. Holding up best were insurance, travel & leisure, and banks.

Among companies in focus, Societe Generale popped up 5.0 percent after announcing it will sell its Russian unit to a Russian oligarch. Meanwhile, Nokian Tyres, the Finnish tiremaker, dropped 16 percent after warning of the impact of sanctions on its business. Ericsson, the telephone equipment maker, fell 2.6 percent after suspending its business in Russia.

Asia Pacific

Asia-Pacific equities weakened Monday with markets focused on rising inflation and interest rates. Chinese markets were hit hardest by supply chain worries and the latest Chinese regulatory crackdown aimed at technology stocks.

Mainland China stocks suffered renewed losses as investors feared more disruptions to the economy as Covid case counts continued to rise in Shanghai and more of its manufacturers suspended operations. The concern is that other cities will announce shutdowns. News that Chinese regulators planned new curbs on internet businesses added to the bearish mood. China's CSI 300 plunged 3.1 percent and the Shanghai index lost 2.6 percent. Hong Kong's Hang Seng dropped 3.0 percent, with internet and tech stocks leading the decline.

Japanese equities ended lower with value outperforming growth stocks. Japan's Nikkei 225 declined 0.6 percent and the TOPIX eased 0.4 percent. Among sectors, banks, utilities, and agriculture outperformed while tech, precision instruments, and information and communications lagged.

The South Korean KOSPI lost 0.3 percent and the Taiwan Taiex fell 1.4 percent. The Indian BSE Sensex dipped 0.8 percent.

Australian equities were mixed with The All Ordinaries index ending flat. On the positive side, bank stocks outperformed to offset weakness in growth stocks including tech and consumer discretionary.

Looking ahead*

In Asia/Pacific, Japanese PPI, Chinese merchandise trade, Indian CPI, and Indian industrial production figures are due. In Europe, German CPI, UK Labour Market Report, French merchandise trade, Eurozone ECB lending survey, and German ZEW figures are on the schedule. In North America, US NFIB, US CPI, and US Treasury balance figures are on tap.

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