Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for June 9, 2020.
Despite futures pointing towards a slightly softer open today, the S&P 500 index of America’s largest companies was in positive territory year-to-date as of yesterday, after shrugging off an error in Friday’s unemployment figures and climbing 1.2% on Monday. Of the three main US stock indices, that leaves only the Dow Jones Industrial Average in negative territory in 2020 so far, although it too is rapidly closing in on the marker.
However, the headline figures do not tell the full story. The recovery has not been universal, and there are wide dispersions between the winners and losers. While the information technology and consumer discretionary sectors of the S&P 500 are up 11.1% and 8.1% year-to-date, the financial sector is down 13.5% — as margins get hammered by rock bottom interest rates — and the energy sector remains 23.1% lower despite the recent rebound in oil prices. IT stocks have been boosted by a mass shift to working from home and connecting virtually. The consumer discretionary sector, which includes Amazon, Target, Home Depot and more, has benefited from consumers stocking up on certain items in the face of the pandemic, and in some cases a shift to online shopping.
Elsewhere, European markets have sold off this morning with the FTSE and Dax down 1.6% and 1.8% respectively. The UK benchmark was dragged down by British American Tobacco, who slashed their profit and revenue forecasts in their latest update.
Boeing now up 50% over the past five trading days
The Dow was the biggest winner among major US stock indices on Monday, gaining 1.7% as some of 2020’s embattled stock sectors continue to claw back ground. Boeing jumped 12.2% on Monday, chemicals firm Dow gained 4.4%, American Express was up 3.6% and oil giant Exxon Mobil closed 3.1% higher. All four stocks remain behind the broader market year-to-date, but are rapidly making up ground. Boeing has now climbed more than 50% over the last five trading days, and is 29% down year-to-date.
The top 10 performers list in the S&P 500 on Monday was a who’s who of companies that have struggled in 2020 so far, as investors continued to be driven by reopening hopes. Cruise firms Norwegian and Carnival both posted double digit gains on Monday, as did airlines United and Alaska, while oil companies Marathon Oil and Occidental Petroleum also ended the day up by more than 10%.
- S&P 500: +1.2% Monday, +0.1% YTD
- Dow Jones Industrial Average: +1.7% Monday, -3.4% YTD
- Nasdaq Composite: +1.1% Monday, +10.6% YTD
BP cutting 10,000 jobs, AstraZeneca exploring mega merger
Two big pieces of corporate news hit the headlines yesterday. First up, energy giant BP announced that it will be cutting around 10,000 jobs, which is 14% of its global workforce, due to the recent crash in oil prices triggered by both the pandemic and a spat between Opec and Russia. The action is the first of many waves of layoffs likely to hit the oil sector this year.
Elsewhere, it was reported by Bloomberg that AstraZeneca has approached rival American drug firm Gilead about a merger, which would bring together two firms on the leading edge of the battle against the coronavirus pandemic. AstraZeneca sank 2.7% following the news. Overall, the FTSE 100 took a breather on Monday, having posted major gains in the previous week’s trading sessions. The index closed the day 0.2% lower, held back by 5% plus losses from online grocer Ocado Group, turnaround specialist Melrose Industries. In the FTSE 250, which closed the day 0.5% down, Aston Martin Lagonda and Dixons Carphone led the way, with daily returns of 12.1% and 8.4% respectively.
- FTSE 100: -0.2% Monday, -14.2% YTD
- FTSE 250: -0.5% Monday, -17.1% YTD
