Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for November 20, 2020.
European markets have opened marginally more positive this morning, but today’s upcoming session has been clouded as officials in Washington clash over the pandemic response.
Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell found themselves in disagreement over several emergency lending programs that were started to support businesses during the Covid-19 pandemic.
Mnuchin said in a letter after markets closed that he would allow the programs to expire, arguing that credit markets have now been brought back to sufficient strength. In response, the Federal Reserve said in a statement that it “would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy.”
US stock futures fell overnight yesterday after the news was reported, with the Dow Jones and S&P 500 set to open down 0.4% and the Nasdaq flat at time of writing. Investors have been waiting with bated breath for a new round of fiscal stimulus, and the news that policymakers on the monetary side of the equation disagree will not be welcomed.
L Brands jumps 18% on Victoria’s Secret recovery
All three major US stock indices climbed on Thursday, with the Nasdaq Composite up 0.9% and the S&P 500 up 0.4%. At the top of the S&P was L Brands, the firm behind Victoria’s Secret and other names, which jumped by close to 18% after beating expectations in its Q3 earnings report. The company delivered a profit of $330m, versus a $252m loss a year ago, boosted by strength in its Bath & Body Works brand and an improvement in Victoria’s Secret. CEO Andrew Meslow said that the firm is heading into the holiday season with a “well-positioned” inventory. Year-to-date, L Brands’ share price is up by more than 100%, after a sustained multi-year downturn.
In other retail news, Macy’s CEO Jeff Genette said in a Thursday interview that the firm has proven it can operate stores safely during the pandemic, according to The WSJ. The firm has been lobbying states and cities to not close down its stores due to surging Covid-19 cases, heading into a crucial holiday season. Year-to-date, and despite having rallied more than 40% in the past three months, the stock is still down some 46%.
- S&P 500: +0.4% Thursday, +10.9% YTD
- Dow Jones Industrial Average: +0.2% Thursday, +3.3% YTD
- Nasdaq Composite: +0.9% Thursday, +32.7% YTD
UK shares fall back, Cineworld looks for a lifeline
Both the FTSE 100 and FTSE 250 fell back yesterday, by 0.8% and 1% respectively. Year-to-date, the FTSE 100 trails its US counterpart the S&P 500 by more than 25 percentage points, despite an upswing in recent weeks. On Thursday, chemicals firm Johnson Matthey, turnaround specialist Melrose Industries and Rolls Royce were among the biggest losers, falling by 5.6%, 4.7% and 3.9% respectively. The UK’s oil giants fell back too, with BP down 3.3% and Royal Dutch Shell down 2.5%.
In the FTSE 250, Aston Martin Lagonda and Cineworld Group were the biggest losers, sinking by 12.3% and 8.7% respectively. Yesterday, The WSJ reported that Cineworld is in talks with investors to secure financial lifelines, after warning last month that it could run out of cash by the end of the year.
- FTSE 100: -0.8% Thursday, -16% YTD
- FTSE 250: -1% Thursday, -10.9% YTD
