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

Stocks Slide As Health Fears Resurface, US Dollar Jumps

By CMC Markets (David Madden)Market OverviewJan 17, 2021 06:32
Stocks Slide As Health Fears Resurface, US Dollar Jumps
By CMC Markets (David Madden)   |  Jan 17, 2021 06:32
Saved. See Saved Items.
This article has already been saved in your Saved Items

Stock markets in Europe are deep in the red as we approach the last trading day of what has been a quiet week.


President-elect, Joe Biden, announced overnight a $1.9 trillion coronavirus relief package – which was at the upper end of forecasts. The long-awaited announcement was the highlight of the week. Sentiment in stocks has slipped since the update was delivered as traders are content to book profit from recent gains. Last week, the FTSE 100 and the CAC 40 set multi-month highs, while the DAX 30 notched up a record high. Much of the gains that there achieved recently were in anticipation of Biden’s stimulus announcement. Lofty equity valuations combined with concerns that countries are going to extend their lockdowns have encouraged traders to exit the market. Pfizer (NYSE:PFE) said the rolling out of its vaccine in Europe will be slowed in the near-term as the pharma giant upgrades its production facility, the news is playing into the bearish move too.

Aveva (LON:AVV) shares hit their highest level since October on the back of its positive trading update. The company provides software solutions for industrial companies. In the nine months until the end of 2020, revenue edged up by 1.5%. The company is getting a lot of repeat business as recurring revenue rose by 10%, which accounted for 68% of total revenue. The continued digitalisation of industry has put Aveva in a good position in terms of future demand It is confident in its full year outlook.

Segro (LON:SGRO), the warehousing specialist, confirmed it collected 98% of the rent that it was due for the year. In addition to that, it has already received 88% of the £63 million rent that is due in the first quarter. The group has a lot of online retailers as clients so it is not under pressure like British Land (LON:BLND) or Land Securities (LON:LAND), who has large exposure to high street assets.

Babcock International (LON:BAB) shares sold off aggressively today as there are concerns the company’s cash flow might be impacted as it is carrying out a review in the profitability of its contracts. Seeing as the group cautioned about an uncertain outlook and they still haven’t issued a guidance, traders took that as a sign that negative news could be in the pipeline. Babcock’s civil aviation business has been hit hard due to the pandemic but its defence unit is picking up some of the slack. Trading in the third quarter was in line with what was experienced in the first half. Revenue for the first nine months fell by 4.89% to £3.39 billion. On the bright side, the order book is up £3.1 billion to £16.8 billion on a year-to-date basis, while the total level for last year was £17.6 billion. Adding to the downward pressure on the stock were the price downgrades from JPMorgan (NYSE:JPM) and Jefferies (NYSE:JEF).

Meggitt (LON:MGGT), specialises in providing sub-systems and components for the aerospace sector, so it also suffered greatly on account of the health crisis. Today’s full year trading update was well received. The group expects full year operating profit to be in the middle of the £180-£200 million range, which was unchanged from the update in November. Last year’s statutory operating profit was £325 million. Annual revenue was £1.7 billion, which was a sharp fall from the £2.27 billion posted last year. The group is optimistic that demand for flights will pick in the months ahead as vaccines get rolled out, so that should help their business.

The Serious Fraud Office launched an investigation into British American Tobacco (LON:BATS) in 2017. It related to suspicions of corruption being carried out, but today the body announced the investigation had come to an end with no charges being brought against the tobacco giant.

The lockdown has rattled Gym Group as full year revenue was £80.5 million, down from £153.1 million last year.


Stocks are in the red as dealers are cutting back on their equity positions now that Biden’s relief package has been announced. It is a little worrying that retail sales fell by 0.7% in December, the all-important shopping month. The November metric was revised from -1.1% to -1.4%. In addition to that, the New York Fed manufacturing reading for January was 3.5, the lowest in seven months. Lately there has been growing evidence the US economy is cooling and today’s reports adds weight to that view.

JPMorgan (NYSE:JPM) kicked off the reporting season for the major banks and the fourth quarter numbers were impressive. EPS was $3.79, which easily beat the $2.62 consensus estimate. Revenue for the period was $30.16 billion, topping the $28.7 billion estimate. Investment banking revenue rose by 37%. Trading revenue increased by 20%, while net interest income slipped by 7% - which was hardly a surprise in light of the depressed interest rate environment. JPMorgan released $2.9 billion in credit reserves - it suggests the losses anticipated from bad debts won’t be as bad as initially predicted.

Citigroup (NYSE:C) posted respectable quarterly numbers too. EPS was $2.08, which comfortably beat the $1.34 forecast. Revenue dropped by 10% to $16.5 billion, narrowly undershooting the $16.7 billion forecast. The bank released $1.5 billion in reserves for credit losses.

Exxon Mobil (NYSE:XOM) shares are in the red as the Securities and Exchange Commission is carrying out an investigation into the valuation of an important asset in Permian Basis, a whistle-blower claimed the asset is overvalued.


The US dollar index is higher as the traders are in risk-off mode. Stocks are in the red across the board so assets that are considered to be lower risk, such as the US dollar, are in demand. Yesterday, the greenback was pushed into the red when Jerome Powell, the head of the Fed, said it is not the time to discuss reducing the size of the bond buying scheme, so the dollar was relatively weak when today’s session started. The move higher in the greenback pushed GBP/USD and EUR/USD into the red.

In November, the UK economy contracted by 2.6% on a month on month basis, economists were expecting a fall of 5.7%. The October reading was revised up from 0.4% to 0.6%, so it was a double victory for British growth. It was reported the services sector saw negative growth of 3.4%, which was painful but far better than the -6.7% reading consensus estimate.

The boarder bearish sentiment has dented the CMC AUD index as well as the CMC CAD index as commodities in are the red.


The move higher in the US dollar has weighed on gold. Historically, the commodity has benefitted from flight to quality flows but the inverse relationship with the dollar is acting as a counteracting force.

Brent crude oil and WTI are in the red as the wider bearish sentiment in the markets has applied pressure to the energy contracts. China’s growing health crisis has led to a fall in oil as it is the largest importer of energy in the world. The Beijing administration has put 22 million people on lockdown due to rising Covid-19 cases, so demand fears are in circulation.

"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. "

Original Post

Stocks Slide As Health Fears Resurface, US Dollar Jumps

Related Articles

Ipek Ozkardeskaya
A Wobbly Rebound By Ipek Ozkardeskaya - May 18, 2022 1

The US equity markets rallied yesterday after taking over a positive session from the Europeans. However, the US retail sales data didn’t necessarily hint at slowing spending, and...

Neil Wilson
U.K. Inflation Surges To 40-Year High By Neil Wilson - May 18, 2022 2

Eyewatering inflation numbers for the UK: CPI hit 9%, the highest in 40 years, and a huge +2.5% month-on-month. RPI rose by 11.1%, also a four-decade high. Producer price inflation...

Stocks Slide As Health Fears Resurface, US Dollar Jumps

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’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
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.
Comments (1)
Velarie Lee
Velarie Lee Jan 17, 2021 11:53
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Why is your report always a day late??
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
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'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
© 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
Sign up with Email