Daily market review

United States

Equities seesawed in ranges Tuesday with markets tentative awaiting the Federal Reserve's policy announcement due Wednesday and value stocks beating growth. The Dow Jones industrial average rose 0.2 percent, the S&P 500 gained 0.5 percent, and the NASDAQ firmed 0.2 percent.

Sectors were mixed with energy stocks better despite lower oil prices, as British Petroleum reported a big earnings beat on elevated oil prices. Other sectors outperforming included chemicals, hospitals, financials, airlines, autos, machinery, telecom, and homebuilders. Lagging were software, restaurants, apparel, and beverages.

Among companies in focus, Chemours, the chemicals giant, rose 17 percent on an earnings beat. Waters, the laboratory instrument maker, gained 8 percent on an earnings beat and better guidance. On the downside, Estee Lauder, the cosmetics queen, fell 5.8 percent after lowering its guidance.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined US$2.90 to US$105.41 while spot gold rose US$4.96 to US$1,867.37. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield declined 1 basis point at 3.03 percent, and the 10-year note yield was down 1 basis point to 2.98 percent.


Equities improved with energy stocks leading on company news while banks gained with rising bond yields. The Europe-wide STOXX rose 0.4 percent, the German DAX 0.7 percent, the French CAC 0.8 percent, and the FTSE 100 was up 0.2 percent.

German bund yields touched 1 percent as European yields tracked rising US bond yields as the market awaits a US rate increase on Wednesday and a UK rate increase on Thursday, The Reserve Bank of Australia raised its case rate by a greater-than-expected 25 basis points on Tuesday. Timing of a European Central Bank rate increase remains uncertain, with an end to ECB quantitative easing expected in June.

British Petroleum gained 2.9 percent to lead oil & gas stocks higher after posting strong operating results despite writing down its Russian assets. Energean, the driller, jumped 7.6 percent and Vestas Wind Systems rose 3.5 percent on analyst upgrades. Among automakers, BMW gained 3.0 percent and Mercedes Benz gained 3.9 percent after selling their car-sharing business to Stellantis, which rose 2.1 percent.

Among companies in the news, BNP Paribas rose 5.2 percent after a strong earnings and revenues beat. On the downside, Logitech, the computer peripherals maker, fell 3.4 percent after cutting its guidance.

Asia Pacific

Asian equities were mostly weaker in limited trading as markets remained on edge over recent US stock weakness and the Fed's policy announcement due on Wednesday. Japan and mainland China were on holiday.

Hong Kong equities ended mixed with the Hang Seng index up 0.1 percent. Trading was volatile with Alibaba and tech stocks recovering after a brief selloff on a report, which proved incorrect, that authorities at the company's base of Hangzhou had imposed curbs on Alibaba founder Jack Ma.

Most sectors declined with tech, health care, and energy lagging while property stocks outperformed. Taiwan's Taiex declined 0.6 percent as investors remained wary of more US market losses and rising rates.

South Korean equities edged down on tech stock weakness with the KOSPI down 0.3 percent. Higher-than-expected South Korean inflation figures added to the bearish mood.

Australian equities slipped and yields surged after the Reserve Bank of Australia raised its policy rate by 25 basis points, more than the expected 15 basis point move, and signaled an end to quantitative easing and more rate increases to come. The All Ordinaries index declined 0.5 percent. Property and materials stocks lagged while information technology and health care held up best.

Looking ahead*

In Asia/Pacific, New Zealand labour market conditions and Australian retail sales figures are due. In Europe, German merchandise trade, the PMI composite final report from France, Germany, and Eurozone, plus UK M4 money supply and Eurozone retail sales reports. In North America, US ADP employment, US international trade in goods & services, US PMI composite final, US ISM services, and Canadian merchandise trade reports are on tap.

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