Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for December 16, 2020.
European markets have opened positively this morning with Germany’s Dax leading the way up 1.6% as optimism creeps in surrounding vaccination and the prospect of US fiscal stimulus ahead of Central Bank meetings on both sides of the pond. Travel and leisure has also seen a bounce as well as better than expected numbers from tyre maker Continental helping the Dax outperform.
The big news on Tuesday in the US came out of the Food and Drug Administration (FDA), which said that Moderna’s Covid-19 vaccine is both effective and safe for use in adults. This week, the same advisory panel that voted to authorise Pfizer’s vaccine will meet to vote on whether or not it will recommend the FDA-authorised Moderna’s offering. The US government has a contract to purchase 200 million doses of the vaccine in the first half of the year, with six million doses to be sent across the US in the first week. US stocks reacted positively to the news, with the S&P 500 up by 1.3%. All 11 of the index’s sectors were in the green, with nine of those adding more than 1% on Tuesday.
In other news, the FT reported that support is growing among lawmakers to agree on a $748bn slimmed down stimulus package, which has had contested elements such as liability protections for businesses and local government assistance stripped out.
Apple jumps 5% on reports of iPhone production ramp up
The broad-based rally on Tuesday lifted the three major US stock indices, which all finished the day more than 1% higher. Year-to-date, the S&P 500 is now up by 14.4%. Apple was one of the major contributors, as the $2trn market cap smartphone maker jumped 5% after reports that iPhone production is set to increase in the first half of 2021. Nikkei reported that the company is planning a 30% increase in iPhones in H1 2021, including its latest iPhone 12 models and older iPhone 11 and iPhone SE models. Apple’s share price is now up by 74% in 2020, including a 10.7% gain in the past three months. Online marketplace eBay also enjoyed a solid day, adding 5.1%, taking its year-to-date gain to 44.2%.
In other news, the end-of-year IPO boom is still rolling this week. Following Airbnb and DoorDash’s mega-IPOs last week, e-commerce firm Wish is pricing its own IPO at the top of its previously expected range, pointing to a valuation of $17bn. The company was founded by a former Google engineer, and is owned by parent firm ContextLogic.
- S&P 500: +1.3% Tuesday, +14.4% YTD
- Dow Jones Industrial Average: +1.1% Tuesday, +5.8% YTD
- Nasdaq Composite: +1.3% Tuesday, +40.4% YTD
Investors weigh poor unemployment figures against Brexit talk progress
London-listed stocks faced another mixed day on Tuesday, as investors dealt with a mixed bag of news related to Brexit deal negotiations, pandemic restrictions and economic data. Official data released yesterday showed that the UK unemployment rate increased to 4.9% in the three months to October, in addition to the biggest annual drop off in total employment in a decade. In UK-EU Brexit deal negotiations, The Guardian reported that Downing Street has watered down a demand on post-Brexit fishing rights. The FTSE 100 closed the day down 0.3%, while the FTSE 250 was up by 0.5%.
In the FTSE 100, housebuilders had a positive day, with Persimmon, Barratt Developments and Taylor Wimpey all up by more than 2.5%. Finance names were in the mix at the top of the index too, with asset manager Standard Life Aberdeen, wealth firm St James’s Place and Lloyds Banking Group all enjoying 2% plus share price bumps. At the other end of the spectrum, pharmaceutical names were a drag, with Hikma Pharmaceuticals, GlaxoSmithKline and AstraZeneca all in the red.
- FTSE 100: -0.3% Tuesday, -13.6% YTD
- FTSE 250: +0.5% Tuesday, -9.3% YTD