Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for October 21, 2020.
The FTSE has opened down 1% as the UK government announced further stricter regional lockdown measures, this time in the Greater Manchester area from tomorrow. Interestingly there are some bright spots in some of the most beleaguered sectors such as financials, industrials and travel as the US inches closer to agreeing a fiscal stimulus package. Standard Chartered tops the FTSE up 2.5%, Rolls Royce and International Consolidated Airlines are up 1.5% each. Trump indicated he was willing to accept a higher value aid package than previously stated, going against his own Republican party stance, nevertheless it has left investors cautiously optimistic that a deal could be making progress.
There were two major pieces of regulatory news affecting giant US firms yesterday. First up, the Justice Department has filed an antitrust lawsuit against Google, which alleges that the division of parent firm Alphabet has misused its power in an anticompetitive way. At the center of the suit is a deal Google has with Apple to make it the default search engine on the company’s browser, which means Apple device users are served up Google search results and advertising. Investors do not appear to be taking the suit as a significant threat to Alphabet or Apple, both of which closed out Tuesday more than 1% higher.
Elsewhere, it was reported that Goldman Sachs will pay $2.8bn and admit wrongdoing to put an end to a Justice Department bribery inquiry tied to the firm’s work for a corrupt Malaysian government fund. Again, Goldman stock rose following the announcement, as the company has been setting aside money to pay the expected fine.
After hours Netflix also tumbled more than 6% following its earnings report, which missed expectations on both subscriber additions and profits. Netflix has previously been one of the standout winners this year, up by more than two-thirds from its low point in March.
GM goes big on electric vehicles
All three major US stock indices had a positive day yesterday, with the financial stocks enjoying the biggest gain of the S&P 500’s 11 sectors. In the top 10 S&P 500 stocks for the day, oil names Apache and National Oilwell Varco enjoyed 5% plus gains, but the index was led by General Motors which climbed 6.8% and continued climbing in after-hours trading. GM’s gain came on the back of news that it is investing $2bn into a Tennessee factory to begin building electric vehicles, including a newly revealed fully electric Hummer truck. The company plans to invest a total of $20bn into electric and autonomous vehicles between now and 2025. At the bottom of the S&P were IBM and Philip Morris, which sank 6.5% and 5.8% following their quarterly earnings reports. Philip Morris stock fell despite beating earnings expectations and revising its forecast upwards; the company reported that tobacco product volumes improved versus Q2 but were still down year-over-year.
- S&P 500: +0.5% Tuesday, +6.6% YTD
- Dow Jones Industrial Average: +0.4% Tuesday, -0.8% YTD
- Nasdaq Composite: +0.3% Tuesday, +28.4% YTD
UK airports are losing £83m a week due to Covid
International Consolidated Airlines Group topped the FTSE 100 yesterday with a 6.9% gain. In the evening, however, a report from the Aircraft Operators Association estimated UK airports are losing £83m a week as a result of the Covid-19 crisis. The FTSE 100 was up marginally overall yesterday, with gains from names including InterContinental Hotels Group and Next balancing against losses from companies such as home builder Taylor Wimpey and software firm Avast.
The FTSE 250 enjoyed a better day, ending up 0.4% higher, led by Cineworld, soft drinks firm Britvic and easyJet, which were up 10.3%, 6.4% and 5.7% respectively. At the bottom of the index was travel booking company Trainline, which sunk 12.9% after it was announced that CEO Clare Gilmartin is stepping down from the job in February. Gilmartin sold more than three million pounds worth of Trainline stock in September.
- FTSE 100: +0.1% Tuesday, -21.9% YTD
- FTSE 250: +0.4% Tuesday, -18.1% YTD