Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for June 19, 2020.
European markets have opened positively after the US reported that an additional 1.5 million people filed for unemployment benefits this week, despite economies in all states attempting to reopen in some format. That takes the total number of people who have filed for unemployment past 45 million in the past three months, but this week’s figure was an improvement of 58,000 on last week.
No individual week has come close to the 6.6 million unemployment filings in the week beginning March 30. There can be significant disparities between the filing figures and the actual unemployment rate, but the weekly number is still closely watched. While the economy has been reopening, the process has been uneven. For instance, in some locations bars and restaurants are slowly returning to normal, but cinemas, gyms and other businesses still face major restrictions. The likely unemployment rate in May – following an error in the reported figure – was likely north of 16%, and the Fed expects it to still be above 9% by the end of the year.
Amid the latest jump in jobless numbers and a fairly quiet day in US markets overall, Asian markets made some headway overnight, with the Hong Kong Hang Seng up 1% and Japan’s Nikkei finishing the week up 0.6%.
Energy names buoyed by oil price on middling day for US stocks
Thursday was a rare quiet one for major US indices, with the S&P 500 up 0.1%, the Dow Jones Industrial average down 0.2% and the Nasdaq Composite finishing in the green with 0.3%. Sector wise in the S&P 500, energy stocks were a standout on the positive end, climbing 1.2% on aggregate, while real estate names fell hardest at a 1.3% loss. Among energy names, Phillips 66, Valero Energy and Marathon Petroleum were among those that closed the day higher, all up more than 3%. A jump of more than 2% in the price of oil, taking WTI crude prices back towards $40 a barrel, was a likely catalyst.
At the bottom of the S&P, Biogen had a difficult day, losing 7.5% from its share price after losing a court case with rival Mylan. The case related to a patent Biogen held on a multiple-sclerosis treatment that has been a major driver of the business. In earnings news, grocery and retail giant Kroger posted revenue and profit expectations that beat analyst targets on Thursday but suffered a negative reaction from shareholders due to removing its financial guidance.
- S&P 500: +0.1% Thursday, -3.6% YTD
- Dow Jones Industrial Average: -0.2% Thursday, -8.6% YTD
- Nasdaq Composite: +0.3% Thursday, +10.8% YTD
Bank of England to inject another £100bn to support economy
The Bank of England said yesterday that it will pump an additional £100bn into the UK economy to combat the damage being done by the pandemic, with the central bank’s Monetary Policy Committee voting eight to one in favour of the action. Earlier in the week, the Bank’s governor, Andrew Bailey, made it clear that it is ready to take further action to mitigate the economic fallout. In stocks, the FTSE 100 fell by 0.5%, while the FTSE 250 closed the day 0.4% lower.
The biggest losers in the FTSE 100 were housebuilder Taylor Wimpey and asset manager Intermediate Capital Group, which both lost more than 5%. For Taylor Wimpey the loss came after it announced that it had raised more than £500m in a share placement. The placement price was at a 4% discount to the firm’s closing price on Wednesday. One of the most interesting stories of the day in Europe was German-listed payments firm Wirecard, which saw its share price plummet by more than 60% after revealing that more than two billion euros in cash is missing. Auditor EY said it couldn’t find the cash balance, which is equivalent to around a quarter of the firm’s balance sheet.
- FTSE 100: -0.5% Thursday, -17.5% YTD
- FTSE 250: -0.4% Thursday, -20% YTD
