Daily market review

United States

An early uptick after some analysts found reasons to like the latest US consumer price figures gave way to declines as investors sold into early strength Tuesday. The Dow Jones industrial average, the S&P 500, and the NASDAQ all declined 0.3 percent.

US CPI figures generally matched expectations and were certainly not as bad as feared; some analysts latched onto a lower-than-expected 0.3 percent monthly rise in core CPI for March as a sign that underlying inflation might be fading. After their early enthusiasm, investors resumed their worries about consecutive 50-basis-point Federal Reserve rate increases and weaker company profits. Meanwhile, Fed Governor Lael Brainard noted the latest core CPI figure was very welcome."

Most equity sectors ended lower, with health care, communications services, and financials off the most, while utilities and energy beat the market. Growth stocks lagged after outperforming in the morning, with internets and entertainment stocks retreating as dip-buying after Monday's selloff fizzled. Pharma and managed care stocks led health care lower, with Pfizer off 1.5 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$5.99 to US$104.52 while spot gold rose US$14.53 to US$1,968.35. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield was down 2 basis points at 2.81 percent, and the 10-year note yield fell 6 basis points to 2.73 percent.


Rising bond yields and stagflation worries continued to depress equities and profit expectations Tuesday. The Europe-wide STOXX and the French CAC both eased 0.3 percent, the German DAX lost 0.5 percent, and the UK FTSE 100 slipped 0.6 percent.

Global fund managers are increasingly concerned about the prospect of recession and rising inflation, with more downside risk for equities, according to the latest Bank of America survey of fund managers, a view reflected in the day's weak showing. German ZEW figures added to the bearish view, with the ZEW current conditions index down 9.4 points to minus 30.8, its weakest reading since May 2021 and more than 33 points below its long-run average.

Among equity sectors, health care, real estate, utilities, and financial services lagged. Holding up best were oil & gas and basic resources, with a boost from rising commodities prices, and banks, with help from rising yields.

Asia Pacific

Carry-over from the Wall Street selloff on Monday undercut Asia-Pacific equities Tuesday, with China the notable exception on hopes for government support.

Chinese equities rebounded after Premier Li Keqiang's said officials should "add a sense of urgency" in acting to boost the economy, which investors judged to mean more stimulus is coming. Reports that Chinese authorities are instructing state-owned funds to buy stocks added to the bid for mainland stocks. On the downside, the Shanghai lockdown continued.

China's CSI 300 gained 2.0 percent, the Shanghai index rose 1.5 percent. Hong Kong's Hang Seng firmed 0.5 percent. Gaming shares were notable winners after Chinese regulators approved new internet games. Tencent rose 3.6 percent in Hong Kong dealings.

A selloff in technology and other growth stocks flowing from Monday's NASDAQ losses and surging US Treasury yields hit Japanese equities. Japan's Nikkei 225 lost 1.8 percent and the TOPIX fell 1.4 percent. Most sectors fell, with marine transport hit hardest.

The tech-heavy South Korean KOSPI declined 1.0 percent and the Taiwan Taiex lost 0.3 percent. The Indian BSE Sensex was down 0.7 percent.

Rising bond yields and falling tech stocks hit Australian equities with the All Ordinaries index down 0.5 percent. Australian bond yields rose as investors braced for possible bad news on inflation from the pending US CPI figures.

Looking ahead*

In Asia/Pacific, Japanese machinery orders and the Reserve Bank of New Zealand policy announcement are due. In Europe, UK CPI, UK PPI, Italian industrial production, and Eurozone industrial production are on the schedule. In North America, the US producer prices report and Bank of Canada policy announcement are on tap.

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