Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for October 14, 2020.
Shares in China hit a record high above $10tn overnight as the country’s swift recovery from coronavirus powers its economy.
The market capitalisation of all shares listed in Shanghai and Shenzhen hit $10.08tn, according to Bloomberg data, above the $10.05tn pinnacle hit in June 2015. It comes after a rally for leading indices in recent months which has overshadowed even the US.
The US itself has a packed corporate calendar this week, and yesterday saw earnings reports from banking giants JPMorgan and Citigroup, plus Apple’s launch event for the new iPhone.
Bank earnings were met with a lukewarm reception from investors, as despite beating analyst estimates, JPMorgan and Citigroup’s share prices both closed the day lower (-1.6% and -4.8% respectively). On its earnings call, Citigroup’s management faced a grilling from analysts after the company’s $400m fine last week which came with an order from regulators to fix its risk management systems. Bank of America analyst Erika Najarian asked if the firm is set to become “the new Wells Fargo in terms of regulatory issues.”
The investor reaction to Apple’s announcement of the latest set of iPhone models – including the first 5G iPhone – was also lacklustre. Some analysts have been predicting that the new models will lead to an upgrade “super-cycle” among existing iPhone owners, but Apple stock fell back 2.7% after the event.
Cruise firms plummet after Royal Caribbean fund looks to raise $1bn
Nine of the S&P 500’s 11 sectors were in the red yesterday, with the financial sector the worst performer of the day at a 1.9% loss. Cruise firms were the worst performers in the index, with Royal Caribbean, Norwegian Cruise Line and Carnival down 13.2%, 8.2% and 7.8% respectively. The sell-off followed Royal Caribbean’s announcement that it is raising $1bn through public stock and private debt offerings. Royal Caribbean also said that it is suspending all departures from Australia and New Zealand through to the end of the year, after cancelling all of its November sailings from Florida.
The other major piece of corporate news yesterday came out of Johnson & Johnson, which said it should know within days if it can resume its Covid-19 vaccine trial following a participant illness. Johnson & Johnson stock closed the day 2.3% lower.
Of the three main US stock indices, the Nasdaq Composite had the best day, closing just 0.1% lower – boosted by gains from eBay, PayPal and Netflix.
- S&P 500: -0.6% Tuesday, +8.7% YTD
- Dow Jones Industrial Average: -0.6% Tuesday, +0.5% YTD
- Nasdaq Composite: -0.1% Tuesday, +32.2% YTD
UK unemployment highest in three years
London-listed stocks fell back yesterday, with both the FTSE 100 and FTSE 250 in the red, although the latter was hit hardest with a 1.5% loss. Investors had to digest UK job figures which showed that the unemployment rate is now at its highest level in more than three years.
Similar to the US, travel names were among the worst performers in the FTSE 250, with National Express and Carnival’s London listing closing the day 8% and 6% lower respectively. In the FTSE 100, Rolls Royce, Lloyds and International Consolidated Airlines were among the names that dragged the index lower, with all three losing more than 4%.
In corporate news, the Telegraph reported yesterday that the cash Cineworld has in the bank may not last until Christmas, citing analysts at Bank of America. The analysts said that if the firm’s cinemas remain closed, the group could run out of cash in November or December, raising the possibility the company’s debt crisis may be set to get even worse.
- FTSE 100: -0.5% Tuesday, -20.9% YTD
- FTSE 250: -1.5% Tuesday, -18.2% YTD