Daily market review

United States

An early equities rally gave way to selling Thursday as bond yields seesawed higher and Federal Reserve Chair Jerome Powell sounded somewhat hawkish. The Dow Jones industrial average fell 1.1 percent, the S&P 500 lost 1.5 percent, and the NASDAQ dropped 2.1 percent.

Powell's comment that a 50-basis point rate increase was on the table for the Fed's May meeting was innocuous but investors reacted badly when the Fed's chief, in response to a question, declined to endorse the notion that the US has reached peak inflation, a concept widely discussed in financial markets, and he repeated that the Fed needs to move aggressively to rein in price increases.

Risk appetite revived overnight after Tesla reported remarkably strong results after the US close, but Tesla pared its gains by about half in New York trading to end up a moderate looking 3.2 percent, a bad sign for the rest of the market.

Among sectors, communications services lagged most with Netflix falling another 3.5 percent after Wednesday's 35 percent plunge, and Facebook/Meta was down another 6.2 percent. Other weak groups included energy, materials, and technology. On the positive side were defensive trades -- real estate and consumer staples.

Airlines outperformed after positive comments on business conditions from American Airlines, up 3.8 percent, and Delta Airlines, up 2.7 percent. Telecom did well after positive results from AT&T, up 4.0 percent. Philip Morris, the tobacco company, rose 2.0 percent after an earnings beat to boost staples.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 62 cents to US$108.00 while spot gold dipped US$4.97 to US$1,951.87. The US dollar rose sharply vs. most major currencies. The US Treasury 30-year bond yield rose 3 basis points at 2.92 percent, and the 10-year note yield rose 5 basis points to 2.90 percent.


Improved risk appetite and company news bolstered equities Thursday with industrials and construction & materials best. The Europe-wide STOXX firmed 0.4 percent, the German DAX rose 1.0 percent, the French CAC rose 1.4 percent, and UK FTSE 100 was fractionally lower.

Tesla's big beat overnight helped to bolster market sentiment along with signs of reopening momentum and strong demand in quarterly company reports.

Among companies reporting positive earnings, Akzo Nobel, the paint company, rose 6.6 percent, Ibstock, the brick and concrete product maker, gained 8.8 percent, and Holcim, the building materials company, gained 2.4 percent to boost construction and materials. ABBN, the heavy equipment maker, rose 4.9 percent on strong orders in the first quarter. Nestle, the foods conglomerate, rose 0.7 percent after affirming its guidance based on higher prices received.

On the downside, basic materials lagged with mining giants Anglo American down 8.2 percent and Antofagasta off 7.7 percent after reporting weak output figures.

Among macro factors, hawkish comments from European Central Bank officials pushed forward ECB rate hike expectations with markets increasingly pricing in three rate increases in 2022 totaling 75 basis points, starting in July.

Asia Pacific

Asia-Pacific equities were mixed with most markets tracking Wall Street higher while China lagged notably.

Chinese markets sold off again as analysts downgraded growth forecasts amid disappointment that the authorities have not acted more aggressively to stimulate the economy, and after President Xi Jinping defended China's strict lockdowns. China's CSI 300 lost 1.8 percent for its fifth straight decline. The Shanghai index dropped 2.3 percent. Mainland stocks saw losses nearly across the board with industrials and materials lagging. Hong Kong's Hang Seng index fell 1.3 percent with internet and technology shares leading the way down.

Japanese equities tracked US markets higher with most sectors rising and growth stocks leading. Declining US bond yields and Tesla's big beat provided an additional lift. Japan's Nikkei 225 rose 1.2 percent and the TOPIX gained 0.7 percent.

Tech stocks lifted South Korean equities with the Kospi up 0.4 percent. The Taiwan Taiex was down 0.1 percent on carryover from weakness in Chinese markets. The BSE Sensex gained 1.5 percent with gains across the board.

Australian equities were mixed but mostly better with the All Ordinaries index up 0.2 percent. Rising prices for liquefied natural gas lifted energy stocks. Strong results for Brambles, the logistics company, up 8.0 percent, boosted industrials. Other winners included health care and utilities. Lagging were technology, materials, and telecom.

Looking ahead*

In Asia/Pacific, Japanese CPI, Japanese PMI composite flash, and Hong Kong CPI figures are due. In Europe, UK retail sales, French, German, Eurozone, and UK PMI composite, reports are on the schedule. In North America, Canadian retail sales and Canadian industrial product prices and US PMI composite flash reports are on tap.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies