Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for December 18, 2020.
European markets are mixed this morning as the EU’s chief negotiator Michel Barnier warns there are mere hours left to secure a trade deal between the UK and the bloc. Sterling has dipped by 0.5% against the dollar, which in turn has helped the FTSE 100 gain by a similar amount due to its overseas earning contingent. Both sides have always talked compromise but also failed to cede ground on certain issues, making it look more likely the UK could leave without a deal at the end of the year.
US stocks were up on Thursday despite another week of increases for initial jobless claim figures, as lawmakers pushed to get a pandemic relief bill over the line before Christmas. There are still disputes to be resolved, with The Washington Post reporting that talks appear likely to drag into the weekend. The role of the Federal Reserve is currently a sticking point, as is exactly where relief funds will be distributed. Jobless claim figures show the ever increasing need for another stimulus package, with the latest week of data showing 885,000 people filed for first-time unemployment benefits.
In corporate news, FedEx made waves on Thursday as it beat earnings and revenue estimates in its quarterly release. However, the firm declined to provide an earnings forecast for 2021, sending its shares down more than 3% in after-hours trading. In its latest quarter, Fedex sales topped $20bn for the first time, with profits more than double the same quarter last year, as it has benefited from a surge in online purchases.
Elsewhere, the revival in commodity markets continues apace, with copper, the world’s most important industrial metal, posting a huge rally from its March lows, climbing more than 70% to a seven-year high above $7,900 a tonne.
The metal has been in huge demand as it is vital to help build out green energy networks and electric vehicles. Other commodities are also higher following a tumultuous year, with gold holding firm at $1,884 and Brent crude oil back above $50, trading at $51 overnight.
Accenture leads S&P 500 higher, Coca-Cola cuts jobs
The S&P 500, Dow Jones Industrial Average and Nasdaq Composite were all in the green on Thursday, up by 0.6%, 0.5% and 0.8% respectively. Sector wise, nine of the S&P 500’s 11 sectors were up, with the real estate, materials and healthcare sectors all gaining by more than 1%. Technology consulting giant Accenture was one of the best performing stocks in the S&P 500, adding 6.9% on the back of a strong quarterly earnings report.
Elsewhere, Coca-Cola announced that it is cutting 2,200 jobs globally, including 1,200 in the US. Per The WSJ, the reductions amount for around 12% of the company’s US workforce and come after the company offered voluntary packages to thousands of staff in the US and Canada in August. Coca-Cola has taken a hit from the closure of restaurants, bars, cinemas and more, with its stock down 3.8% year-to-date.
- S&P 500: +0.6% Thursday, +15.2% YTD
- Dow Jones Industrial Average: +0.5% Thursday, +6.2% YTD
- Nasdaq Composite: +0.8% Thursday, +42.3% YTD
Stocks mixed after BofE rate hold, furlough scheme extension
On Thursday, UK Chancellor Rishi Sunak extended the UK’s furlough scheme by another month, until the end of April 2021. The Bank of England also decided to hold interest rates steady, although the Monetary Policy Committee noted the Covid-19 vaccine rollout reduces the downside risk to the economy. However, caution prevailed, with the MPC adding that UK GDP growth in Q4 is likely to be weaker than expected back in November. The FTSE 100 closed the day out 0.3% lower, while the FTSE 250 gained 1%. In the FTSE 100, Vodafone, United Utilities and Ocado were the biggest losers, falling 4.1%, 2.8% and 2.7% respectively. In the FTSE 250, private air travel firm Signature Aviation jumped by 40% after reports that private equity giant Blackstone is in talks to buy the firm. Gambling firm Rank Group was also up double digits, adding 10.4%.
- FTSE 100: -0.3% Thursday, -13.1% YTD
- FTSE 250: +1% Thursday, -7.3% YTD