Daily market review

United States

Equities rebounded late Monday as investors bought the dip and bright spots emerged in a mostly bleak picture. Markets were off through midafternoon as worries about rising interest rates and falling earnings kept equities on the defensive. The Dow Jones industrial average gained 0.3 percent, the S&P 500 rose 0.6 percent and the NASDAQ jumped 1.6 percent as growth stocks outperformed.

Among sectors showing resilience, communications services got a lift from bargain-hunting in Netflix, up 4.8 percent, and Roku, up 11 percent. Software, chip-makers, autos, home-builders, retailers, and banks outperformed too. Lagging were pharma, airlines, real estate investment trusts, metals, and machinery.

Late dip-buying in fixed income pushed bond yields back from the day's highs after the US 10-year note yield touched 3.0 percent for the first time since 2018. Yields remained higher on the day despite US purchasing managers data suggesting a slower pace of expansion. Investors generally expect no near-term relief from rising commodity prices flowing from the ongoing Ukraine conflict or from Chinese supply chain disruptions due to anti-Covid restrictions.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined US$1.03 to US$108.31 while spot gold dropped US$37.54 to US$1,862.41. The US dollar was higher vs. major currencies. The US Treasury 30-year bond yield rose 7 basis points at 3.04 percent and the 10-year note yield rose 8 basis points to 2.99 percent.


Equities remained under selling pressure Monday as investors focused on rising interest rates and energy costs. The Europe-wide STOXX lost 1.5 percent, the German DAX dipped 1.1 percent, and the French CAC fell 1.7 percent. UK markets were on holiday.

Weakest sectors included tech, autos, energy, and construction while best were travel & leisure and retail. Energy prices remained in focus as European Union ministers considered an embargo on Russian oil by year end after Russia cut off gas shipments to Poland and Bulgaria.

European purchasing managers figures showed the expansion in the region's manufacturing business slowed in April, with rising costs and supply chain disruptions flowing from the Ukraine crisis and shutdowns in China.

Among companies in the news, Volkswagen slipped 0.7 percent after announcing a deal to develop automated driving technology with Qualcomm. Vestas Wind Systems fell 7.9 percent after an earnings miss. Mercedes Benz dropped 6.4 percent after going ex-dividend.

Asia Pacific

Asian equities extended Friday's US stock selloff and bond yields continued higher. Equity losses were muted and trading was limited as mainland China and Taiwan were shut for Labor Day holidays.

Investors focused on the impact of China's Covid situation and the government's restrictions on movement. Chinese purchasing managers data for April came in weaker than expected with bearish implications for global growth.

Japanese Nikkei 225 and the TOPIX both eased 0.1 percent. Activity was cautious ahead of the Federal Open Market Committee policy announcement due Wednesday and Japanese markets are closed for public holidays from Tuesday through Thursday.

South Korean equities slipped with the KOSPI down 0.3 percent and technology and financials leading the decline. The BSE Sensex eased 0.2 percent.

Australian equities dropped with the All Ordinaries index down 1.3 percent. Australian yields jumped 10 basis points across the yield curve as the market expects the Reserve Bank of Australia to raise rates by 15 basis points at its policy meeting Tuesday.

Looking ahead*

In Asia/Pacific, the RBA policy announcement and South Korean CPI and Hong Kong GDP figures are due. In Europe, German unemployment, UK PMI manufacturing final, Eurozone PPI, and Eurozone unemployment rate reports are on the schedule. In North America, US factory orders and US JOLTS reports are on tap.

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Global Bond Market Recap

Global Currency Recap

Commodities and currencies