Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for June 23, 2020.
European markets have opened higher this morning following some upbeat PMI data. Readings above 50 indicate growth and while the readings for Germany stopped just short, France’s numbers cleared that important level. France’s CAC 40 is up 1.6%, the UK benchmark FTSE 100 is up 0.8% but leading the way is the German Dax up over 2%. Markets have also been helped amid clarity from President Trump that the US-China trade deal is still intact after contradictory statements about it.
On Monday, Apple announced that it plans to move away from using Intel chips in its Mac laptops and computers, as part of a two-year transition to its own in-house designs. Apple already makes the processors for the iPhone and iPad. The news did not come as a big shock to Intel investors and there have been rumblings of the move in recent weeks. The smartphone giant will be using architecture from ARM to build its chips, as it does with the iPad and iPhone, making it more straightforward to develop apps and software that will work on all its devices. Apple stock closed the day 2.6% higher, while Intel held its ground thanks to the two-year timeline for the transition.
In other headlines, President Trump signed an order temporarily banning new immigrants on a raft of visa types, including the H-1B visa for high-skilled workers. The move puts technology companies and other US firms that rely on a supply of foreign talent in a difficult position. The Trump administration’s rationale is that American workers should be prioritised as the economy recovers, but the move has been criticized by several senators from within his own party.
Nasdaq Composite continues to tear higher
After a slow start on Monday morning, all three major US stock indices closed the day well into the green, with the Nasdaq Composite leading the way on a 1.1% gain. The index is now up 12.1% year-to-date, and 25% over the past 12 months. Stocks including PayPal, Netflix and Nvidia helped take the index higher on Monday, gaining 3.6%, 3.2% and 2.9% respectively. In the S&P 500, which closed 0.7% higher, the biggest winners were clothing firm Gap, heating and air conditioning firm Carrier Global and fast casual food chain Chipotle Mexican Grill. Gap stock gained 8.3%, driven by Wells Fargo analyst Ike Boruchow, upgrading his rating on the company from underweight to overweight, a two-step jump. Boruchow also increased his price target from $8 to $19, citing the company’s $1.9bn in real estate holdings and Athleta brand, which he feels are undervalued by investors. Travel names brought up the back of the S&P 500, with American Airlines, Norwegian Cruise Lines and Royal Caribbean Cruises all closing the day around 6% lower, as rising Covid-19 case numbers continue to eat into investors’ optimism.
In US economic data, sales of existing homes in the US crashed to the lowest level since 2012.
- S&P 500: +0.7% Monday, -3.5% YTD
- Dow Jones Industrial Average: +0.6% Monday, -8.8% YTD
- Nasdaq Composite: +1.1% Monday, +12.1% YTD
Bank of England governor: Britain nearly went broke in March
On Monday, Bank of England governor Andrew Bailey said that panic selling of UK government bonds nearly drove the country to insolvency in March, and had the central bank not stepped in “the government would have struggled to fund itself in the short run”. He added that in effect, there was a “pretty near meltdown of some core financial markets”. Both the FTSE 100 and FTSE 250 sank on Monday, with the FTSE 100 closing the day 0.8% lower, taking its year-to-date loss to 17.2%. As in the US, travel and travel-related names were among the worst performers, with International Consolidated Airlines Group the biggest loser in the index with a 4.6% loss. In the FTSE 250, which closed the day down 0.6%, cruise firm Carnival was the biggest loser with a 10.2% loss. The cruise firm has dropped out of the FTSE 100 in recent weeks due to its market cap no longer earning it a place in the index of the UK’s largest companies. Similarly, easyJet, engineering company Meggitt and British Gas owner Centrica have all been demoted too.
- FTSE 100: -0.8% Monday, -17.2% YTD
- FTSE 250: -0.6% Monday, -19.7% YTD