Daily market review

United States

Buyers reentered the market in force Tuesday to power gains nearly across the board on the view that sentiment has been overdone to the downside, and as oil prices pulled back. The Dow Jones industrial average gained 1.5 percent, the S&P 500 rose 1.6 percent, the NASDAQ rose 2.2 percent.

A retreat in oil and other commodities bolstered risk appetite after a gloomy forecast on world economic growth from the International Monetary Fund and hawkish Federal Reserve comments fueled expectations for weaker demand. A better-than-expected showing for US housing starts despite rising interest rates provided support, and homebuilders rallied.

Growth stocks topped value as investors saw value in beaten down names, including FANMAG stocks, despite another jump in bond yields. Best sectors were technology, consumer discretionary, real estate, financials, and industrials. Reopening stocks got a lift after a federal judge overturned federal rules requiring masks on public transportation. Notable gainers included airlines, hotels, cruise lines, trucking, retailers, and apparel. Lagging were pharma, miners, and energy, plus Chinese tech on the latest Chinese regulatory crackdown on internet stocks.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$5.66 to US$107.38 while spot gold dropped US$28.85 to US$1,948.63. The US dollar rose vs. major currencies. The US Treasury 30-year bond yield rose 6 basis points at 3.00 percent, and the 10-year note yield climbed 8 basis points to 2.94 percent.


Russia's offensive in eastern Ukraine together with downgraded global growth forecasts from the International Monetary Fund weakened equities Tuesday, but a Wall Street rally limited the decline. The Europe-wide STOXX lost 0.7 percent, the German DAX eased 0.1 percent, the French CAC fell 0.8 percent, and UK FTSE 100 was down 0.2 percent.

Citing the war in Ukraine, the IMF sees global growth slowing from an estimated 6.1 percent in 2021 to 3.6 percent both this year and next. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than the IMF projected in January.

Among sectors, worst were real estate, insurance, food & beverage, media, health care, and telecom. On the positive side, oil and gas stocks outperformed as oil prices rose on news European Union officials were considering wider bans on Russian energy imports. A better showing for Daimler, up 2.1 percent, and Volkswagen, up 3.3 percent bolstered automakers and helped German markets beat the region.

Among companies in the news, JTC, the fund manager, dropped 13 percent on an earnings miss. SSP, the food service group, fell 6.3 percent. and Wizz Air, the budget airline, fell 6.1 percent after analyst downgrades. On the plus side, Virbac, the animal pharma company, rose 8.9 percent after reporting a revenues beat and raising its guidance.

Asia Pacific

Asia-Pacific equities were mixed with most markets better but China lagging, and Hong Kong off sharply on renewed weakness in technology shares.

A new round of regulatory trouble for China's technology and e-commerce giants hit Hong Kong with the Hang Seng index dropping 2.3 percent. Other negatives for Chinese markets: downgrades in Chinese growth forecasts after the latest round of official data, and high Covid case counts in Shanghai and elsewhere. On the positive side were reports of government plans to boost support for industries hurt by anti-Covid lockdowns. China's CSI 300 declined 0.8 percent and the Shanghai index eased 0.1 percent.

Japanese equities advanced with value stocks outperforming and most sectors higher. Japan's Nikkei 225 rose 0.7 percent and the TOPIX gained 0.8 percent. Best were marine transportation, natural resources, and automakers. Exporters derived support from ongoing weakness in the yen, which appears to reflect rising US interest rates while the Bank of Japan aims to keep rates steady.

Strength in chipmakers boosted South Korean equities with the KOSPI up 1.0 percent, while the Taiwan Taiex gained 0.6 percent. The BSE Sensex lost 1.2 percent with technology and financials off sharply.

Another rally in commodities prices boosted Australian equities with the All Ordinaries index up 0.6 percent. Rising Australian bond yields underpinned financials after Reserve Bank of Australia meeting minutes brought forward the timing of expected RBA rate increases to June, with faster rate increases to follow.

Looking ahead*

In Asia/Pacific, Japanese merchandise trade figures are due. In Europe, German PPI, Italian merchandise trade, Eurozone industrial production, and Eurozone merchandise trade reports are on the schedule. In North America, Canadian CPI and US existing home sales reports are on tap, plus the Fed beige book assessment of US economic conditions.

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