Daily market review

United States

Another uptick in US bond yields depressed equities Friday but the market saw a late bid to help the major indexes recover from the day's lows. The Dow Jones industrial average slipped 0.3 percent, the S&P 500 declined 0.6 percent and the NASDAQ lost 1.4 percent.

Another solid US jobs report confirmed expectations for "expeditious" US rate increases, and kept long-term market rates rising, with the US Treasury 10-year note yield up another 9 basis points to 3.13%. Investors talked up the drop in labor participation as inflationary as it suggests employers will be obliged to keep raising wages to attract workers. Short-term Treasury yields declined for a second day as the global risk-off move and equity outflows continued. Higher bond yields and sustained equity losses may call into question the view that there is no alternative to equities.

Oil prices extended recent gains to help energy shares advance as the European Union maneuvered to end purchases of Russian oil. Chevron, up 2.8 percent, was among the day's best. Utilities, known for relatively steady dividends, also outperformed. Almost all other sectors sold off, paced by losses in technology, consumer discretionary, materials, communications services, and real estate. Megacaps were notable losers weighing on the averages.

Among companies in focus, Under Armour, the sports clothier, plunged 24 percent after saying its business had been disrupted by supply chain trouble and store closings due to Covid restrictions in China. Fubotv, the video streamer, lost 21 percent on earnings and revenues misses. Among notable Dow decliners, Nike fell 3.5 percent and American Express lost 2.3 percent in the downdraft.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$2.27 to US$113.08 while spot gold rose US$3.05 to US$1,881.52. The US dollar gained vs. most major currencies. The US Treasury 30-year bond yield rose 9 basis points at 3.22 percent, and the 10-year note yield rose 9 basis points to 3.13 percent.


Equities recovered from their lows but ended down as markets focused on rising bond yields and slowing economic activity. The Europe-wide STOXX fell 1.9 percent, the German DAX slipped 1.6 percent, the French CAC dipped 1.7 percent and the FTSE 100 was down 1.5 percent.

More comments from European Central Bank officials added to expectations for near-term rate increases from the ECB. Uncertainty over the impact of China's Covid lockdowns and rising energy costs depressed market sentiment. German industrial production dropped 3.9 percent in March, even weaker than expected, on fallout from Covid and Ukraine effects.

Real estate shares lagged on rising interest rates. Other weak performers included food & beverage, media, construction, chemicals, industrials, and technology Holding up best were autos & parts and oil & gas.

Among retail shares, Adidas fell 3.8 percent after cutting profits guidance in light of China lockdowns. Boohoo, the online fashion retailer, declined 3.0 percent after an analyst downgrade. IAG, owner of British Airways, fell 7.0 percent on an earnings miss. ING, the bank, lost 4.7 percent on profits and revenues misses linked to Russia exposure.

Asia Pacific

Asian equities extended Thursday's US selloff with investors fearing a regional economic slowdown as US interest rates and the dollar rise and China's maintains its zero-Covid policy.

China's CSI 300 index fell 2.5 percent and the Shanghai index lost 2.2 percent. Hong Kong's technology stocks were hit hardest and the Hang Seng index dropped 3.8 percent. Taiwan's Taiex lost 1.7 percent.

Japan managed gains with the Nikkei 225 up 0.7 percent and the TOPIX up 0.9 percent as trading resumed after holidays. Risk appetite drew support from Prime Minister Fumio Kishida' comment that Japan may ease anti-Covid border controls in June. Value stocks outperformed growth. Best sectors included mining, automakers, oil & coal, and banks.

South Korea's KOSPI lost 1.2 percent. Indian equities tracked the US selloff with the BSE Sensex off 1.6 percent.

Concern that hawkish central banks will lead to recession weighed on Australian equities with the All Ordinaries index down 2.3 percent. Highly valued growth sectors suffered the most on rate worries, with technology stocks off nearly 5 percent, in line with Thursday's NASDAQ rout.

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