News: US stocks have slowest day this year


Trading has slowed as investors grapple with wild rotations and await the earnings season
Newsfeed07 Apr 2021
Photo credit: AFP Photo


US

Stocks dropped in the slowest trading day of 2021 after a rally that drove the equity market to all-time highs. Treasuries climbed.

Volume on US exchanges slipped below 10b shares for the first time this year. Tech companies led losses in the S&P 500 Index on Tuesday (6 April), offsetting gains in retailers. The benchmark slipped 0.10% to 4,073.94. The Dow Jones Industrial Average and the Nasdaq Composite Index also retreated, by 0.29% to 33,430.24 and 0.05% to 13,698.38, respectively. Stocks tied to the Archegos Capital Management blow up ended the session higher as investors brushed news that Credit Suisse Group AG unloaded more than USD2b of the shares in the latest block trades stemming from the liquidation of Bill Hwang’s fund.

Trading has slowed in recent days as investors grappling with wild rotations awaited the start of the earnings season. Traders bought stocks in record amounts in the first quarter of 2021 as a combination of generous stimulus and bets on an economic recovery drove USD372b into global equity funds, according to some strategists. The data confirm the bullish market sentiment that has pushed shares to fresh highs, with optimism over vaccination efforts outweighing concern that higher bond yields can interfere with the rally.

On the economic front, data showed US job openings rose to a two-year high in February, led by gains in some of the industries hardest hit during the pandemic. The International Monetary Fund upgraded its global growth forecast for the second time in three months, while warning about a divergence between advanced and lesser developed nations. – Bloomberg News.

 

EUROPE

Europe stocks rose to a record high, more than a year after the pandemic spurred a market collapse, as investors looked past the region’s slow pace of vaccinations and focused on prospects for a global economic recovery.

The Stoxx Europe 600 Index gained as much as 1% to 436.47 before ending the session up 0.70% at 435.26, surpassing a peak of 433.9 reached on 19 February last year. Cyclicals such as miners and automakers led the advance, while travel and leisure stocks also rose, lifted by cruise operator Carnival Plc.

With Europe’s markets reopening after the Easter break, shares followed Wall Street’s Monday (5 April) rally as solid US data added to evidence the recovery is gaining momentum. Rising government bond yields have also boosted the appeal of economically sensitive sectors in 2021, while weighing on frothier parts such as Technology. That is helping Europe’s outperformance, as it is heavily exposed to cheap and cyclical shares.

The Stoxx 600’s record comes as the S&P 500 and MSCI All-Country World indices already trade at all-time highs. Within Europe, German, and Nordic markets hit the milestone of recouping lockdown losses early on, with the DAX Index rising to a record as early as December.

Benchmarks of Greece and Spain remain well below last year’s levels, though France’s CAC 40 Index climbed to its highest since June 2007. UK shares, especially domestically focused ones, have started to catch up after Britain struck a Brexit deal and made faster progress on COVID-19 jabs than the continent. The FTSE 250 Index has gained 7.4% this year and is also approaching an all-time high.

Sector wise, while defensives such as Tech and Consumer Staples led Europe’s initial rebound from the virus-fuelled rout, cyclical industries have rallied sharply since. Miners, autos, and travel shares have more than doubled since the market low in March 2020, while Value sectors such as energy are starting to catch up. Banks are among the best performers this year. – Bloomberg News.

 

JAPAN

First mobile phones, then faxes – now childcare is the latest sector to see a shakeup from the policies of Japan’s prime minister.

A series of stocks offering childcare and education services have seen significant moves in Tokyo in the past days amid reports that Prime Minister Yoshihide Suga aims to form a new “Children’s Agency”, a government department that would oversee and strengthen policy for infants and children in a country with one of the lowest fertility rates in the world.

The policy may become a core feature of the ruling Liberal Democratic Party’s manifesto for a lower house election that must take place this year. The news has boosted a series of previously obscure small caps, with shares in Youji Corporation, which provides physical education classes for young children, almost doubling since the policy was first proposed by junior lawmakers last week (ended 2 April). Baby Calendar Co Ltd, a newly listed baby care services provider, rose by its limit for two straight days, before plummeting today.

Oversight of nurseries, kindergartens and so-called certified child centres is currently spread across different Japanese ministries. Establishing a Children’s Agency “would align with the Suga administration’s goal of breaking down administrative silos”, analysts said.

Whether Suga will survive in office to see the Children’s Agency come to light remains to be seen. Japan’s premier continues to walk a tightrope amid broad public dissatisfaction with his handling of the pandemic, and must also survive a party election with his term as party leader set to expire in September. – Bloomberg News.

The Nikkei 225 Index rose 0.15% to 29,740.00 at the open on Wednesday (7 April). It tumbled 1.30% to 29,696.63 on Tuesday.


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