European markets have opened in the red as investors dial down their risk as Brexit negotiations near a critical point ahead of Sunday’s deadline. In addition to this, an agreement on a US fiscal stimulus package still looks some way off. Despite some vaccine optimism, US index futures are trading down 0.5%.
In the US on Thursday, weekly initial jobless claims data gave investors cause for concern, surging to 853,000 in the latest week of data, up from 730,000 the week prior. New Covid-19 cases in the US are running at more than 200,000 a day, which is forcing a return to stricter social distancing restrictions for many companies and hurting the labour market. Late in the day, however, the US Food and Drug Administration’s vaccine advisory committee voted to recommend emergency approval for Pfizer and BioNTech’s Covid-19 vaccine, with seventeen in favour, four nos and one abstention according to CNN. That sets the stage for a final decision from the FDA, which still needs to accept the recommendation.
Airbnb share price more than doubles on first trading day
Short-term rental platform Airbnb’s flotation was the big news in US markets on Thursday, as the company’s share price hit more than double its IPO price on its first day of trading. Having set a $68 price on Wednesday evening, the company opened at $146 a share and closed the day out at $144. That values the company at close to the $100bn mark, just months after it laid off a quarter of its staff to cope with the impact of the pandemic.
Overall, US stocks were mixed on Thursday, with the S&P 500 and Dow Jones Industrial Average both marginally in the red, while the Nasdaq Composite added 0.5%. In the S&P 500, energy stocks were the standout performer, adding 2.9%, as Brent crude prices passed the $50 mark. Oil exploration firms Occidental Petroleum and Apache led the index with gains of 9.9% apiece, followed by Twitter which added 8.4%. Twitter’s share price jump was driven by news of an integration with Snapchat that will allow users to share tweets via Snapchat.
S&P 500: -0.1% Thursday, +13.5% YTD
Dow Jones Industrial Average: -0.2% Thursday, +5.1% YTD
Nasdaq Composite: +0.5% Thursday, +38.3% YTD
Oil stocks, miners lead the FTSE 100 higher
London-listed shares also faced a mixed Thursday, with the FTSE 100 up by 0.5% and the FTSE 250 down 0.6%. A drop in the value of Sterling played a factor, given the FTSE 100’s greater exposure to overseas earnings – which get a boost when the pound is weaker. Oil stocks led the FTSE 100, reacting similarly to their American counterparts to the news of oil crossing the $50 per barrel mark. BP added 4.5% to its share price, while Royal Dutch Shell gained 3.8%. Mining stocks also enjoyed a positive day, with BHP Group, Evraz, Rio Tinto and Antofagasta all up by more than 2%. At the bottom of the index were banks and homebuilders, although the biggest loser was online grocery store Ocado Group which fell by 7.2%. That slump came despite the company raising its full-year profit guidance for the third time in 2020, as the firm is one that stands to take a hit from a successful Covid-19 vaccination program.
FTSE 100: +0.5% Thursday, -12.5% YTD
FTSE 250: -0.6% Thursday, -9.7% YTD
What to watch
US consumer sentiment data: On Friday, preliminary consumer sentiment data for December will be released by the University of Michigan. The index came in at 76.9 for November, and consensus expectations for December are a small decline to 76.5. The US economy is heavily dependent on consumer spending, which accounts for 70% of economic activity, so consumer sentiment data is closely watched.
Brexit negotiation updates: Brexit negotiations between the UK and EU have been a rollercoaster this week, with small breakthroughs but still major differences between the two sides. Updates on talks will be key to watch as they progress on Friday and over the weekend, particularly on any of the main sticking points, which include fishing rights, a level playing field on government subsidies and regulations, and how to resolve disputes about the implementation of the deal.
Crypto corner: Major US life insurer buys $100m of Bitcoin
Massachusetts Mutual Life Insurance Co, the $29.6bn US mutual insurer, has purchased $100 million in Bitcoin for its multi-billion dollar general investment fund. The group told numerous outlets it had taken the first foray into Bitcoin and may look to increase its position in future.
MassMutual, which was founded in 1851, is the latest company to invest in the largest cryptoasset. US firms MicroStrategy and Square are others which have already snapped up Bitcoin amid talk of growing institutional adoption and demand.
The investment in Bitcoin will represent 0.04% of the group’s general investment account, which totals $235 billion in total. “We see this initial investment as a first step, and like any investment, may explore future opportunities,” spokeswoman Chelsea Haraty reportedly said.
Bitcoin has delivered a 153% return year-to-date, and that is despite the recent pullback from its record peak just shy of $20,000.
All data, figures & charts are valid as of 11/12/2020.
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