Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Equities Fall Amid Health Worries, Dollar Pops

By CMC Markets (David Madden)Stock MarketsJun 25, 2020 05:46
uk.investing.com/analysis/equities-fall-amid-health-worries-dollar-pops-200443276
Equities Fall Amid Health Worries, Dollar Pops
By CMC Markets (David Madden)   |  Jun 25, 2020 05:46
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Equity markets are deep in the red this afternoon as health concerns are weighing on sentiment.

Europe

Yesterday’s update from Dr Anthony Fauci, a health advisor to the US government, spooked traders as he described the increase in Covid-19 cases in some US states as ’disturbing’. The statement comes as certain US states, such as California, have seen an increase in the infection rate, which is a result of loosening lockdown restrictions. The medical expert wasn’t extremely pessimistic as he added there might not be a need for a total lockdown. As of 4 July, the UK will relax its social distancing policy from 2 metres to 1 metre, in addition to that, some lockdown restrictions will be eased too. This should provide assistance to the UK economy, but there are worries we will see an increase in the infection rate in the months ahead.

Earlier today it was announced the US are considering introducing tariffs on $3.1 billion worth of goods from the EU and the UK. It would appear that President Trump is picking a trade fight with Europe in an effort to distract US citizens from the domestic health situation.

The IMF now predicts the global economy will contract by 4.9% in 2020. In April, the body projected a 3% fall in global growth. The negative revision to the outlook wasn’t a shock since the organisation recently said its forecast will be reduced.

Premier Foods (LON:PFD) shares have bucked the wider negative trend on the back of its solid preliminary annual results. Revenue and adjusted pre-tax profit increased by 2.8% and 6% respectively. The group was given a boost during the lockdown as certain consumers decided to stockpile goods, while some people started baking more. Premier confirmed that it anticipates to top current expectations in relation to revenue and profits. The firm previously planned to save £5 million over the next two years and now it feels that it will exceed the target. Trading in the new financial year has been robust as revenue in the first quarter is expected to be roughly 20% higher on the year.

Petrofac (LON:PFC) shares have sold off today after the oil services firm said the major decline in the oil price seen in recent months has impacted their business in terms of being awarded contracts. The news is not a shock seeing as it is very common for energy firms to curtail their spending when there is a downturn in the underlying oil market. Conversely, a higher oil price usually sparks an increase in spending by oil groups, so Petrofac will have to weather the storm. The group is adjusting to the new environment as it is to cut costs by $125 million this year and up to $200 million will be cut next year. The guidance in relation to revenue and profit margins remains suspended.

Crest Nicholson (LON:CRST) posted poor first half numbers and the outlook was weak too, hence why the stock is in the red. Adjusted profit before tax in the six month period slumped to £4.5 million, a drop of 93% on the year. The company now expects full year adjusted pre-tax profit to be between £35 million and £45 million. Keep in mind that last year’s profit was over £120 million, so it would be a considerable fall. The house builder cited the pandemic and Brexit for the disappointing performance. That seems like a weak excuse seeing as many of its peers, such as Taylor Wimpey (LON:TW), Persimmon (LON:PSN) and Bellway (LON:BWY) didn’t undergo such as sizeable fall in earnings.

Wirecard's (LON:0O8X) scandal continues as the authorities in Germany have issued an arrest warrant for the former COO, Jan Marsalek. The former CEO, Markus Braun, was been released on bail – he was arrested on suspicion of fraud. The company has been in the spotlight lately as there are questions over the existence of a €1.9 billion cash balance.

Dean Finch has resigned as CEO of National Express (LON:NEX) and he will take the top job at Persimmon (LON:PSN).

Lufthansa (LON:0H4A) shares are in the red as it is understood the airline has drawn up a plan B in case the shareholders don’t back the €9 billion rescue package offered by the German government. The vote will be held tomorrow.

US

The major indices are lower as traders are worried by the warning from Dr Fauci. In certain US states, the number of new infections has been rising recently, so the situation has been bubbling away in the background, but the remarks from Dr Anthony Fauci has made dealers sit up and take notice. The possibility of a trade spat with the EU and the UK hasn’t helped sentiment either. In the past 48 hours, President Trump said the US-China trade deal was intact. It seems that he is now directing his attention to Europe, possibly for political gain – he wants to be seen as if he is standing up for the US.

A story circulated yesterday that Dell (NYSE:DELL) are weighing up their options in relation to VMware (NYSE:VMW). Dell has an 81% holding in VMware, and there is talk that Dell might look to acquire the other 19% that it doesn’t own, or perhaps it might seek to sell off the 81% stake. Both stocks are trading higher.

Carnival (NYSE:CCL) shares are lower following the downgrade of its debt to ‘junk’ status by S&P. The ratings agency feels that demand for cruises will remain weak on account of the Covid-19 crisis. The reduction in the credit rating could spark other ratings agencies to follow suit.

FX

The US dollar continues to benefit from safe haven plays, and that is what is going on today. The currency has pulled back a large portion of the ground it lost yesterday when traders were in risk-on mode. GBP/USD plus EUR/USD have been hit by the positive move in the greenback. It was a quiet day in terms of economic data in Europe and the US. The German IFO business climate reading for June was 86.2, which was a decent improvement from the 79.7 posted in May.

Commodities

Gold registered a new seven year high in this session but it has since retreated, and now it is broadly flat on the day. Given the risk-off sentiment doing the rounds, you’d expect gold to be higher today, but because the greenback is acting as a safe haven play these days, it seems to be holding the metal back. The asset is in an uptrend and a break above $1,780 might pave the way for $1,800 to be tested.

WTI and Brent crude saw a jump in volatility on the back of the EIA report being announced. US oil stockpiles increased by 1.44 million barrels, while traders were only anticipating a build of 850,000 barrels. Gasoline stockpiles fell by 1.67 million barrels, a larger decline than expected. The oil price has tumbled on health concerns, as demand might be hit.

Disclaimer: CMC Markets is an execution-only service 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.

Original Post

Equities Fall Amid Health Worries, Dollar Pops
 

Related Articles

Equities Fall Amid Health Worries, Dollar Pops

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email