Daily market review

US, Europe, Asia rebound as investors see equities oversold

United States

Equities bounced back Friday, with growth and megacaps leading to the upside, on the view that equities were oversold. The Dow Jones industrial average rose 1.5 percent, the S&P 500 gained 2.4 percent, and the NASDAQ was up 3.8 percent.

Gains were across the board, with a boost from short covering after many stocks found support at the recent lows on Thursday afternoon. Reports suggesting Shanghai may be nearing an end to its lockdowns boosted risk appetite too.

Despite Friday's gain, the S&P closed down for a sixth straight week, a remarkably long run to the downside. Many analysts believe the selloff has not yet been dramatic enough to set the stage for a sustained rally.

Information technology and consumer discretionary shares outperformed as the market rebounded, just as they lagged during recent declines. Energy stocks advanced with oil prices extending their gains.

Among companies in focus, Twitter lost 9.7 percent after Elon Musk put his proposed acquisition on hold, while Tesla rose 5.7 percent to boost consumer discretionary stocks on the view that Musk is less likely to sell Tesla stock to buy Twitter.

Among other winners, Robinhood Markets rallied 25 percent after investor Sam Bankman-Fried disclosed he had taken a big stake in the online broker. Ford rose 8.5 percent after an upgrade at Morgan Stanley. Occidental Petroleum gained 8.2 percent on news Berkshire Hathaway had raised its stake.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$3.31 to US$111.44 while spot gold fell US$14.06 to US$1,808.59. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield rose 7 basis points at 3.10 percent and the 10-year note yield rose 6 basis points to 2.93 percent.

Europe

Equities bounced Friday as global markets attracted dip-buying. The Europe-wide STOXX gained 2.1 percent, the French CAC rose 2.5 percent, the German DAX rose 2.1 percent and the FTSE 100 was up 2.6 percent.

For the week, investors have noted first quarter European earnings so far have been mostly positive though many companies are warning the second half may see weaker results. On the interest rate front, European Central Bank officials have been signaling their readiness to start raising interest rates in July.

Among sectors, technology, banks, and travel & leisure outperformed while defensive sectors lagged. Rising oil prices lifted energy shares. Technology got a boost starting late Thursday after Federal Reserve Chair Jerome Powell repeated his preference for 50 basis point rate increases, as opposed to 75. Banks drew support from expectations for European Central Bank rate increases.

Basic resources lagged as investors continue to see Chinese industrial demand slowing in light of Covid disruptions. Utilities came under pressure with Vestas Wind System off 4.4 percent after a downgrade at Berenberg.

Asia Pacific

Asian equities rebounded Friday on bargain hunting with a boost from Thursday's late recovery on Wall Street.

Late gains for US tech and other growth stocks and positive Japanese company earnings lifted Japanese equities, with the Nikkei 225 up 2.6 percent and the TOPIX up 1.9 percent. Among the day's best, Softbank jumped 12.2 percent despite setting records for losses on falling tech valuations.

Chinese markets tracked US markets higher. China's CSI 300 index gained 0.8 percent and the Shanghai index rose 1.0 percent. Hong Kong's Hang Seng jumped 2.7 percent with internet and tech stocks leading. Rumors of pending lockdowns in Beijing, which were denied by authorities, hurt risk appetite, along with much weaker than expected growth in Chinese new yuan loans.

Taiwan's Taiex rose 1.4 percent and South Korea's KOSPI rose 2.1 percent with tech stocks best. Indian equities underperformed on weak economic data and earnings with the BSE Sensex down 0.3 percent.

Australia's All Ordinaries index rallied 2.0 percent amid bargain hunting and regional gains. Technology, real estate investment trusts, health care, and energy shares outperformed.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

Looking forward

This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 (“Fidelity Australia”).  Fidelity Australia is a member of the FIL Limited group of companies commonly known as Fidelity International.

This document is intended for use by advisers and wholesale investors. Retail investors should not rely on any information in this document without first seeking advice from their financial adviser. This document has been prepared without taking into account your objectives, financial situation or needs. You should consider these matters before acting on the information.  You should also consider the relevant Product Disclosure Statements (“PDS”) for any Fidelity Australia product mentioned in this document before making any decision about whether to acquire the product. The PDS can be obtained by contacting Fidelity Australia on 1800 119 270 or by downloading it from our website at www.fidelity.com.au. The Target Market Determination (TMD) for Fidelity Australian product(s) can be found at www.Fidelity.com.au. This document may include general commentary on market activity, sector trends or other broad-based economic or political conditions that should not be taken as investment advice. Information stated herein about specific securities is subject to change. Any reference to specific securities should not be taken as a recommendation to buy, sell or hold these securities. While the information contained in this document has been prepared with reasonable care, no responsibility or liability is accepted for any errors or omissions or misstatements however caused. This document is intended as general information only. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity’s managed investment schemes is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. Reference to ($) are in Australian dollars unless stated otherwise.

© 2022 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International and the Fidelity International logo and F symbol are trademarks of FIL Limited.

Share: