Market Commentary

US stocks claw back most of yesterday’s tech driven slump; China property sentiment sours

• The Dow Jones Industrial Average rose 0.9% and the S&P 500 gained 1.1%. The tech-heavy Nasdaq Composite Index jumped 1.3% a day after falling more than 2%.

• Facebook, one of Monday’s biggest losers, clawed back some of its losses, even as it came under fire by a whistleblower on Capitol Hill. Outside the tech sector, companies bounced back partly on strong economic data.

• The Institute for Supply Management’s Services Index showed a reading of 61.9 for September, ahead of estimates of 60. This helped push non-tech stocks — and the overall market — higher. More than 80% of S&P 500 stocks were on the rise, according to FactSet.

• US oil futures stretched their gains into a fourth straight session to their highest settlement since late October 2014, a day after the Organization of the Petroleum Exporting Countries and its allies decided not to accelerate their plan for gradually relaxing production cuts.

• Overseas, Europe stocks rebounded as the Stoxx 600 rose 1.2% while Tokyo’s Nikkei 225 fell 2.2% against a backdrop of deepening concerns in the Asian region over global inflation, oil prices and a property market implosion in China.

• Earlier, the Nikkei had dropped more than 3% and briefly entered correction territory, declining more than 10% off its mid-September high. Some investors had been spooked by comments from the newly appointed Fumio Kishida indicating he might push for a capital gains tax increase, a potentially sharp reversal from the reform-driven “buy Japan” rhetoric with which foreign and domestic investors have been enticed into the market since 2013.

• The Straits Times Index ended 0.7% lower at 3,068.12 points amid weakened sentiment.

• The Hang Seng index bucked the overall trend regionally as it rose around 0.3%. Chinese oil majors advanced amid the prospect of elevated oil prices, with PetroChina jumping to its highest close since January 2020. Some pharmaceutical stocks rebounded after a slump yesterday, with Shanghai Fosun Pharma surging 13%.

• Sentiment toward Chinese property developers soured further after Fantasia Group failed to repay some maturing US-Dollar bonds, shattering a period of calm that had been spurred by speculation authorities would support the industry and limit damage to the economy.

• Fantasia should pose a lesser risk to markets than China Evergrande due to its smaller size. It ranked only 60th in a list of contracted sales in the first quarter of this year while Evergrande was third — and its US$12.9 billion in total liabilities are dwarfed by Evergrande’s US$304.5 billion.