Daily Market News: Vaccine rally ends and value sectors retreat amid Trump executive order

Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for November 13, 2020.

Value names that had been on the receiving end of a boost following Pfizer’s Monday vaccine news fell back on Thursday, with the S&P 500’s energy sector down 3.4% and the financial sector down by 1.7%. However, in the first four days of the week value stocks made up some ground against their growth counterparts. BlackRock’s iShares S&P 500 Value ETF gained 3.8% between last Friday’s close and yesterday, while the iShares S&P 500 Growth ETF lost 1.1%.

Dominating headlines on Thursday evening was the news that President Trump has signed an executive order banning US investors from holding shares in companies that could have exposure to the Chinese military. In total, more than 30 Chinese firms are affected, including China Mobile and China Telecom, which both have listings on the New York Stock Exchange.

Overnight, following a mild pullback in US equity indices, shares across Asia also dipped, with the Nikkei down 0.5% in Japan, and Hong Kong’s Hang Seng off 0.3%. The former remains within touching distance of its year-high nonetheless, with investors reacting favourably to vaccine news and the US election result in the last week.

Gold, which has paused for breath after a 25% plus rally this year, also rose to $1,876 overnight.

Disney’s streaming service has 73 million paying members

All of the three major US stock indices fell by around 1% on Thursday, with all 11 of the S&P 500’s sectors in the red. Healthcare and consumer staples stocks held up best, with the sectors down 0.4% and 0.2% respectively. Of the Dow Jones Industrial Average’s 30 constituents, 26 ended the day lower, with none of the remaining four adding more than 1%. At the bottom of the pile were Intel and Boeing, which lost 3% apiece.

One company in the spotlight was Disney, which delivered its latest quarterly earnings update on Thursday. The firm’s share price initially jumped by 6% in after-hours trading following the report, which included a much smaller loss than anticipated, and positive news on the growth of the company’s Disney+ streaming service. At the end of the last quarter, Disney+ had 73 million paid subscribers. The stock’s gains were tempered back to a 3% gain after the company’s earnings call with analysts, in which it said it will not pay its semi-annual dividend in January.

  • S&P 500: -1% Thursday, +9.5% YTD
  • Dow Jones Industrial Average: -1.1% Thursday, +1.9% YTD
  • Nasdaq Composite: -0.7% Thursday, +30.5% YTD

FTSE 100 ends eight-day, 14% winning streak

Both the FTSE 100 and FTSE 250 were in the red on Thursday, after the former delivered gains for eight trading days straight. Over those 8 days, the index gained more than 14%, bringing it back from a more than 30% year-to-date loss. Rolls Royce, HSBC and Sainsbury’s all weighed heavily on the index, with losses on Thursday of 8.6%, 3.9% and 3.3% respectively.

Investors had UK Q3 GDP data to digest on Thursday. While the figures showed that the UK economy grew by a record 15.5% in Q3 from Q2, the rebound was not as large as was hoped. GDP also only increased by 1.1% in September, the last month of Q3, pointing to a slowing recovery even before England went into its latest lockdown. That is likely to lead to an economic contraction once more in Q4.

  • FTSE 100: -0.7% Thursday, -16% YTD
  • FTSE 250: -0.2% Thursday, -11.8% YTD
forex and crypto market analysis

What to watch

Draftkings: Fantasy sport and betting firm Draftkings has more than doubled its share since it went public through a merger in April. Despite the interruption of many sporting seasons the closure of physical casinos due to the pandemic gave demand for online gambling a huge boost. The company delivers its latest set of quarterly earnings on Friday, where gambling legalisation, the return of physical sports, and how well online gambling demand is being sustained will all be key points to watch. Currently, 14 Wall Street analysts rate the stock as a buy, and eight as a hold.

US consumer sentiment: Investors will get a key window into the health of the consumer-driven US economy on Friday, when November’s University of Michigan consumer sentiment index will be delivered. Similar to October, a small uptick is anticipated, despite the US continuing to post record Covid-19 cases.

Crypto corner: Bitcoin breaks through $16,000

Bitcoin consolidated its position above $16,000 overnight after hitting the major milestone yesterday. In morning trading on Friday the cryptoasset was above $16,200 per coin as investors helped it move into an ‘upward continuation pattern’, according to eToro’s analyst Simon Peters.

“Now that the US election is behind us, attention is returning to the proposed fiscal stimulus package. Even with the prospect of a Covid-19 vaccine, the US economy will still need support to assist it through the period before it is made available to people. The size of the package and the mechanics behind its funding could be the catalyst to finally take us past $17,500,” Peters said.

Ethereum prices also continued to move to higher ground on the same trade as investors look for alternatives to dollar assets. In the last week it is up near 10% at $458 per coin, taking its one-year return to 157.8%.

All data, figures & charts are valid as of 13/11/2020. All trading carries risk. Only risk capital you can afford to lose.  

This is a marketing communication and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without having regard to any particular investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared utilizing publicly-available information.

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