Daily market review

United States

After six straight weeks of losses, US shares struggled to move higher Monday with gains fizzling at session's end. The S&P 500 lost 0.4 percent and the NASDAQ fell 1.2 percent while the Dow, supported by a 3.1 percent gain in Chevron and a 2.1 percent gain in Merck, posted a fractional 0.1 percent gain.

Economic data were light in the session but did include an unexpected drop in the Empire State index in an early sign of trouble for this month's manufacturing sector. Industrial production for the month of April will be posted on Tuesday as will retail sales.

Defense contractor ManTech jumped 15.0 percent on an analyst upgrade, while Spirit Airlines rose 13.6 percent to $19.27 after JetBlue offered $30 per share or $3.2 billion for the carrier. JetBlue fell 6.1 percent.

McDonald's, down 0.4 percent, announced it will sell its 850 restaurants in Russia. The burger chain closed its restaurants in the country in March but has continued to pay its Russian employees, at a cost of more than $50 million per month.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$2.39 to US$113.93 while spot gold rose US$13.10 to US$1,824.89. The US dollar fell vs. major currencies. The US Treasury 30-year bond yield was unchanged at 3.10 percent while the 10-year note yield fell 4 basis points to 2.89 percent.


Weak data from China held back European shares as did a run of hawkish comments from European policymakers. Germany's DAX fell 0.5 percent and France's CAC was down 0.2 percent while the FTSE 100 gained 0.6 percent.

Pablo Hernandez de Cos sees the European Central Bank ending its asset-purchase programs by July followed "very soon" thereafter by the likelihood of rate hikes. Francois Villeroy de Galhau warned that weakness in the euro poses a "significant" risk for the continent's inflation outlook; the euro is at a five-year low against the dollar. In the UK, Bank of England Governor Andrew Bailey warned a parliament committee of an "apocalyptic" price risk ahead for food costs.

Eurozone's trade balance moved deeper into the red in March, to a seasonally adjusted €17.6 billion shortfall for the sixth deficit in as many months and a new record high. The latest deterioration reflected a 0.9 percent monthly rise in exports that was more than offset by a 3.5 percent increase in imports. The ongoing rise in the shortfall is in large part attributable to the surge in oil and other commodity prices triggered by the war in Ukraine together with lockdowns in China.

In geopolitical news, Sweden's government approved the country's application to join NATO, in what would end two centuries of neutrality. The OMX Stockholm 30 fell 0.3 percent.

Asia Pacific

Zero-Covid took its toll on April data from China as industrial production fell 2.9 percent on the year and retail sales a substantial 11.1 percent, both worse than expected. Health restrictions had a more limited effect on investment as fixed asset investment rose 6.8 percent on the year (year-to-date basis), yet this was also lower than expected.

In a positive note, Shanghai's vice mayor said the city's epidemic is under control and suggested that restrictions in the city may begin to lift. The Shanghai composite showed limited reaction, down 0.3 percent on the session.

Producer inflation in Japan surged to a fresh 41-year high, hitting an annual 10.0 percent in April on higher prices for crude oil, steel products and non-ferrous metals. Japanese markets were mixed with the Nikkei up 0.5 percent but the Topix down 0.1 percent.

India's Sensex ended six-straight losing sessions, rising 0.3 percent on strong earnings from Eicher Motors, up 7.6 percent on the session, and Adani Group, up 2.9 percent after buying controlling stakes in Ambuja and ACC, two cement makers. Other Asia markets were mixed with South Korea's KOSPI down 0.3 percent and Australia's All Ordinaries up 0.3 percent.

Looking ahead*

Singapore merchandise trade, minutes from the Reserve Bank of Australia, and Indian wholesale prices will be released on Monday in Asia. European data will include the ILO unemployment rate from France, the labour market report from the UK, merchandise trade from Italy, and the second estimate for first-quarter GDP from the Eurozone. Retail sales, industrial production, business inventories, and the housing market index will be posted in the US.

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