Daily market review

United States

Equities were mixed Wednesday with value outperforming growth after Netflix's big miss hit communications stocks, especially streaming plays and internets. The Dow Jones industrial average rose 0.7 percent, the S&P 500 declined 0.1 percent and the NASDAQ lost 1.2 percent.

Investors were on alert for the next nasty shock for highly valued growth stocks as Netflix, the video streaming leader, plunged 35 percent after saying it lost 200,000 subscribers in the first quarter vs. expectations for an increase of 2.5 million. Netflix was already off about 40 percent in 2022 amid rising competition and as consumers apparently trim discretionary spending amid rising costs for essentials. Investors are more skittish about downside surprises as financial conditions have tightened and after Facebook/Meta's big miss earlier this year. Meta dropped another 7.8 percent Wednesday in spillover from the Netflix rout.

On the positive side Wednesday, Procter & Gamble rose 2.5 percent to lift consumer staples after posting an earnings beat. Financials, health care, drug stores, transports, and homebuilders had a good day too. Oil servicers lagged after Baker Hughes, down 3.8 percent, missed on earnings and revenues.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil was flat at US$107.38 while spot gold rose US$8.21 to US$1,956.84. The US dollar declined vs. most major currencies. The US Treasury 30-year bond yield fell 11 basis points to 2.89 percent and the 10-year note yield fell 9 basis points to 2.85 percent.


Positive company news supported equities Wednesday with technology and food & beverage stocks best. The Europe-wide STOXX gained 0.8 percent, the German DAX advanced by 1.5 percent, the French CAC rose 1.4 percent and UK FTSE 100 was up 0.4 percent.

Among companies reporting upbeat results, ASML, the Dutch chipmaker, rose 5.3 percent to boost technology. Meanwhile, Danone, the food giant, gained 5.8 percent and Heineken, the brewer, rose 4.3 percent to lift food & beverage. Among others in focus, Just Eat Takeaway gained 2.1 percent on strong quarterly results. Maersk, the shipping giant, rose 2.9 percent after saying shipping activity in Shanghai was returning to normal.

On the downside, basic resources lagged with miners depressed by Rio Tinto, down 2.9 percent after reporting disappointing production figures. Credit Suisse declined 1.5 percent after warning its business would suffer Ukraine effects including higher provisioning against losses.

Among macro factors, investors remain on edge ahead of French presidential elections on Sunday. Polls suggest President Emmanuel Macron is ahead but a win over far-right candidate Marine Le Pen is not certain. Investors recall their surprise when Donald Trump upset Hillary Clinton in the 2016 US presidential election.

Asia Pacific

Asia-Pacific equities were mixed with most markets tracking Tuesday's rally on Wall Street but China lagging.

Chinese markets sold off after the People's Bank of China disappointed investors hoping for a cut in the one-year loan prime rate from 3.7 percent. Analysts also noted the PBOC set the yuan exchange rate much lower, which reduces the central bank's scope to cut interest rates in light of rising US rates. On the positive side, Shanghai authorities eased anti-Covid restrictions, which suggested its factories and port may soon resume normal operations.

China's CSI 300 lost 1.6 percent and the Shanghai index declined 1.4 percent. Property stocks were notable laggards. Hong Kong's Hang Seng index eased 0.4 percent.

Japanese equities tracked US equities higher with an additional boost from the Bank of Japan's latest round of unlimited purchases of 10-year Japanese government bonds to defend the 0.25 percent yield level. Japan's Nikkei 225 rose 0.9 percent and the TOPIX gained 1.0 percent. Most sectors rose with automakers, banks, pulp & paper, and textile stocks best. Toyota was among the day's top performers, up 3.7 percent.

South Korean equities gave up early gains on late selling, with the KOSPI ending flat. The Taiwan Taiex was up 0.9 percent on tech stock strength. The BSE Sensex gained 1.0 percent with bargain hunting after five consecutive down days.

Australian equities were mixed, with the All Ordinaries index ending flat as oil and commodities prices pulled back to weigh on miners and energy stocks. On the positive side, health care advanced as Ramsay Health Care, the health care provider, rallied 24 percent on a takeover offer from KKR. Consumer staples outperformed too after raised guidance from Bega Cheese, up 1.0 percent.

Looking ahead*

In Asia/Pacific, New Zealand CPI figures are due. In Europe, French business climate indicator, Eurozone HICP, Eurozone EC consumer confidence reports are on the schedule. In North America, Fed Chair Jerome Powell is scheduled to speak at 11 am ET and 1 pm ET, plus reports are on tap for US jobless claims, Philadelphia Fed manufacturing survey, and US leading indicators.

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