Today’s positive move in the FTSE 100 is largely a complete reversal of yesterday’s negative move. In terms of index points, HSBC, Lloyds (LON:LLOY), BP (LON:BP), Royal Dutch Shell (LON:RDSa), Rio Tinto (LON:RIO) and BHP Billiton (LON:BHPB) have contributed the most to the equity benchmark, and they were some of yesterday’s largest fallers.
European market update
Hopes continue to circulate in regards to vaccines being developed for Covid-19. The OECD now predicts that global GDP will contract by 4.2% this year, which is an improvement on the previous forecast of -4.5%. At the same time, it lowered its 2021 forecast to 4.2% from 5%. The bullish sentiment is seen across the board as hospitality, transport, travel and property stocks are higher too. Housebuilders like Persimmon (LON:PSN), Taylor Wimpey (LON:TW) and Redrow (LON:RDW) have been helped by the wider bullish mood and the Nationwide report that house prices increased by 6.5% on an annual basis in November.
Unicredit (MI:CRDI)'s share price has slipped today on the back of the news that CEO, Jean Pierre Mustier, will depart his role in April 2021. It was reported that Mustier’s relationship with the board of directors has been under strain recently. The banker has been overseen a return to stability in recent years and there were reports he was looking to spin off other assets as a way of slimming down the group. It is understood he intended to dispose of certain Italian assets and spin off foreign assets via listings in Germany. Jean Pierre Mustier wasn’t keen on Unicredit purchasing Monte dei Paschi di Siena - which the Italian government was prompting. The Italian banking sector is under pressure and lending margins are squeezed so it seems prudent to sell-off non-core assets rather than increasing their exposure to the strained Italian banking industry.
Frasers (LON:FRAS) is in focus today in light of the news that Arcadia has entered administration. Frasers is controlled by Mike Ashley, and only yesterday the retail firm said it would be interested in purchasing some of Arcadia’s assets should it go out of business. Mr Ashley has been snapping up high street business in recent years even though more and more business is being carried out online.
Smith & Nephew (LON:SN) share are up today after Barclays (LON:BARC) decided to issue an overweight rating for the stock. Their price target for the medical device group is 1,900p.
US market update
Bullish sentiment is doing the rounds in the US on the back of optimism for coronavirus drugs and hopes of a stimulus package. A bipartisan $900 billion relief package bill has been put forward but is it unlikely to get much support as too many discrepancies exist. The fact that some numbers are being bandied about is a good sign. It was reported that Nancy Pelosi of the Democrats and Steven Mnuchin, the Treasury Secretary, will hold stimulus package talks tomorrow. The S&P 500 and the NASDAQ 100 – cash markets – hit new all times highs.
Zoom Video Communications Inc shares are a little lower this afternoon following the release of the third quarter update figures last night. EPS came in at 99 cents and that comfortably topped the 76 cents that equity analysts were expecting. Compared with the same time frame one year ago, revenue surged by 367% to $777.2 million and that topped the $694 million forecast. In the Americans, revenue grew by 300% while Europe, Middle East and Africa posted a colossal rise in revenue of 629%. There is no doubt the company has seen a surge in demand for its teleconferencing services but it might be tricky to maintain those extremely high levels of expansion, especially if there are vaccines in the pipeline. In the fourth quarter, the company is expecting revenue to be between $806 million and $811 million. That would equate to growth of 329% - which would be exceptional by ordinary standards, but it would be a dip from the 367% posted in the latest quarter.
NIO Inc, the Chinese electric vehicle maker, continues to go from strength to strength as last month it delivered 5,291 vehicles – a record level. On an annual basis, it was a 109% increase in growth. The electric vehicles sector has become very popular in recent years and the rebound in the Chinese market has added to NIOs’ positive run.
BlackBerry shares have surged on the news that it has entered into a joint venture Amazon (NASDAQ:AMZN) Web Services with respect to an intelligent vehicle data platform.
FX update
The US dollar has taken another tumble as it seems that traders are keen to hold riskier assets like equities and metals. In recent months the greenback has attracted safe haven funds, so today we are seeing the opposite – dealers are ditching the dollar for stocks.
EUR/USD and GBP/USD have been given a big lift on account of the slide in the US dollar. The pound is pushing higher versus the dollar on the back of news that UK-EU trade talks have been stepped up to a serious level so a deal could announced in the near-term.
The AUD/USD is only slightly higher today despite the sizeable fall in the dollar. Overnight, the Reserve Bank of Australia kept rates on hold at 0.1%, in line with forecasts. Philip Lowe, the head of the bank said he would consider upping the bond buying scheme in a bid to assist the jobs market if it is needed. It is possible that those comments have held the Australian dollar back. Seeing as metal prices are strong it seems odd that the currency pair hasn’t moved that much.
Commodities update
Gold and silver have been given a major boost by the continued weakness in the US dollar. The metals are listed in dollar so the cheaper currency makes it relatively cheaper to buy the commodity. It is worth noting that the metals have been under pressure recently so it seems there is an element of bargain hunting in play too.
WTI and Brent crude have fallen as Opec+ failed to reach an agreement with regards to future production plans. It would seem that division persists in relation to keeping the existing cuts or essentially increasing supply. Dealers fear that supply will be upped come January, hence the sell-off.
"DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. "