Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for January 24, 2020.
In US stocks, after tumbling 3.6% on Wednesday after disappointing on subscriber growth in the US, Netflix surged 7.2% on Thursday. It was boosted by weak results from Comcast, which has plans to get into the streaming wars this year with its own Peacock service. Comcast’s share price sank 3.8% after reporting a worse than expected drop in video customers in Q4. Revenue in its NBCUniversal TV division, which Peacock is being tied into, saw revenue drop by 2.6% during the quarter. Overall Comcast beat earnings expectations, highlighting the importance being placed on its entry into the streaming market in terms of securing its future.
Uber strikes electric deal with Nissan
Uber and Nissan have signed a deal to help drivers in London switch to fully electric vehicles, as part of its plans to make London uber journeys emissions-free by 2025.
The deal will see Nissan will make 2,000 of its Sunderland-made electric Leafs available to Uber drivers at below the market rate. Drivers will also be able to use money accumulated from Uber’s “clean air fee,” which charges riders 15p per mile on all London journeys, to help pay for the cars.
While the news had a limited impact on its shares after hours, Uber has had a strong start to 2020, with shares up some 20%.
Xerox launches bid to take over HP board
Xerox’s hostile battle to take over computer and printing giant HP stepped up a notch on Thursday, as the firm nominated a full set of 11 directors to replace HP’s board, cueing up a proxy vote battle – as shareholders have to vote to approve director nominations. HP stock rose 0.8% on the news, while Xerox fell marginally. Intel posted a solid earnings quarter, beating analyst estimates on both earnings and revenue, thanks to growth in its data center unit. The semiconductor giant’s share price rose by 0.9%, and it is now up by more than 30% since the start of September. Fashion brand VF, which occupies a substantial portion of the US backpack market, and also owns brands such as The North Face and Timberland, was one of the biggest losers on Thursday. Its share price dropped by close to 10%, after lowering its full year guidance. Wells Fargo made headlines again on Thursday, after its former CEO was fined $17.5m for his role in the company’s fake accounts scandal.
- S&P 500: +0.1% Thursday, +2.9% YTD
- Dow Jones Industrial Average: -0.1% Thursday, +2.2% YTD
- Nasdaq Composite: +0.2% Thursday, +4.8% YTD
Coronavirus fears sink UK shares again after Scottish cases emerge
Both the FTSE 100 and FTSE 250 fell heavily on Thursday, as the indices continue to lag behind their US peers in 2020. Increased concerns about the impact of the coronavirus were partly to blame, after it was reported that several people in Scotland were being tested for the virus after displaying symptoms. Only three stocks in the FTSE 100 climbed by more than 1%, and at the bottom end names including cruise firm Carnival, International Consolidated Airlines Group and InterContinental Hotels group fell sharply, due to fears that the virus would lead to lower demand for international travel. At the bottom of the FTSE 250 were miners KAZ Minerals and Ferrexpo, which fell by 8.6% and 6.2% respectively.
- FTSE 100: -0.9% Thursday, -0.5% YTD
- FTSE 250: -1% Thursday, -1.6% YTD
Stocks to watch
American Express: American Express has beaten analyst earnings expectations in seven of the past eight quarters, and its share price is up 32% over the past year. Best known for credit cards, the company also offers insurance, savings accounts, business services and more. The firm places plenty of competition in the premier credit cards segment in the US from JPMorgan’s Chase Sapphire cards, and introduced a variety of changes to the perks it offers across most of its credit card lineup. Those changes kicked in at the start of January, so won’t have affected Q4, but expect analysts to ask for an indication of how the changes have played out on the firm’s Friday earnings call.
Nextera Energy: Florida-based energy giant NextEra has had a big year, climbing 44.9% over the past 12 months, including a 10.1% gain in the past three months. The company beat earnings expectations last quarter, and currently 12 Wall Street analysts rate it as a buy, four as a hold and one as a sell. Something to watch when the firm reports its Q4 earnings on Friday will be the pace at which it is developing its renewable energy capabilities. On the last earnings call, the company reported that it had added 1,375 megawatts of renewables projects, taking its total to 12,300 megawatts – Nextera has around 46,400 megawatts of generating capacity overall.
Air Products and Chemicals: Industrial chemicals and gases firm AP&C is another name that has delivered major gains over the past 12 months, with its share price climbing 52.4% after being close to flat in 2018. Management’s optimistic earnings forecast for 2020 has been one source of support for the share price. Investors will be looking for information on potential returns on investments the firm has made when the company reports earnings on Friday. The company is investing around $500m into a steam methane reformer to produce hydrogen, as part of a deal with Gulf Coast Ammonia in Texas – its largest ever investment in a single US project. Currently, 12 Wall Street analysts rate the stock a buy, and 13 a hold.
Heavy selling of cryptoassets continued across the board in the last 24 hours, with the three largest cryptoassets all seeing losses above 3%.
Bitcoin started yesterday at $8,522, it has fallen to $8,261 over the course of the last day, with Ethereum and XRP also weaker. Ethereum is off more than 4%, down from $163.2 to $156.9, whilst XRP has slumped from $0.227 to $0.217.
Upgrade for Bitcoin?
A privacy and scalability upgrade for bitcoin known as ‘Taproot’ has been submitted to be reviewed. A major change like this would constitute a ‘soft-fork’ and would require an overall consensus to have a chance of going through, in fact this would be the biggest since SegWit in 2017 which was adopted after a long and drawn out debate.
All data, figures & charts are valid as of 24/01/2020. All trading carries risk. Only risk capital you can afford to lose.
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