Markets sold off globally on Monday, with US stocks suffering their worst day in a month, on the back of record Covid-19 case numbers. On Sunday, White House chief of staff Mark Meadows told CNN that “we’re not going to control the pandemic,” with the US death total closing in on 250,000 people. In the US, the Dow Jones Industrial Average was down 2.3%, in the UK the FTSE 100 ended 1.2% lower, and in Europe the Stoxx Europe 600 index fell by 1.8%.
Markets were also knocked by reports that House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin once again failed to reconcile differences on the contents of a new US fiscal stimulus package. The chances of an agreement by election day have now been “largely extinguished,” according to Bloomberg.
Energy stocks lead the S&P 500 lower
The Dow was the biggest loser on Monday among the main three US stock indices, but the S&P 500 and Nasdaq Composite fell too, by 1.9% and 1.6% respectively. Energy stocks were hit hardest in the S&P, along with the materials, industrials, financials and communication services sectors, which all fell by more than 2%. Only nine stocks in the S&P 500 gained more than 1% on Monday, while several fell by more than 7%. Cruise firms occupied three of the bottom four positions in the index, with Royal Caribbean, Carnival and Norwegian Cruise Lines down 9.7%, 8.7% and 8.5% respectively.
Over the past month, the S&P 500 is now up 1.5%, the Dow Jones Industrial Average has gained 0.4% and the Nasdaq Composite has advanced 2.2%.
S&P 500: -1.9% Monday, +5.3% YTD
Dow Jones Industrial Average: -2.3% Monday, -3% YTD
Nasdaq Composite: -1.6% Monday, +26.6% YTD
UK’s biggest losers in 2020 fall hard to start week
Both the FTSE 100 and FTSE 250 sank on Monday, falling 1.2% and 1.4% respectively. In the FTSE 100, some of the year’s biggest losers were hardest hit, with International Consolidated Airlines Group (IAG) down 7.6% and Rolls Royce down 7.2%. That situation was repeated in the FTSE 250, where Carnival’s London-listed shares fell 10%, Cineworld 9.1% and Tui 8.9%.
This week, European Union chief negotiator Michel Barnier is in London to continue negotiations on the details of the UK’s departure deal, after a pause last week due to a temporary standoff between the parties. The value of sterling climbed slightly against the euro, as optimism creeps in that a deal on the trading relationship between Britain and the EU by the 31 December deadline.
FTSE 100: -1.2% Monday, -23.2% YTD
FTSE 250: -1.4% Monday, -18.4% YTD
What to watch
Microsoft: Microsoft’s share price has gained 33% this year, with the $1.6trn market cap giant helping propel the broader market higher. As with many of the other major tech names, its momentum has stalled of late, with the firm’s share price only advancing 3.1% in the past three months. The company’s cloud business will be a key point of focus when it reports its latest set of quarterly earnings on October 27 after the market close, where analysts are expecting an earnings per share figure of $1.54 versus $1.38 in the same quarter last year. Currently, Wall Street analysts heavily favour a buy rating on the stock.
Big pharma: A host of major pharmaceutical names deliver quarterly earnings updates today, including Pfizer, Merck, Novartis and Eli Lilly & Company. All four firms are involved in Covid-19 vaccines or treatments, and progress on that front will be a key point on all of the companies’ earnings calls. Of the four companies, Eli Lilly is the only stock in the green this year, with Merck’s 13% loss the worst performance in 2020. On Monday, it was reported that Pfizer’s Covid-19 vaccine is now being tested on children. Pfizer has been the best performer over the past month, with its share price up 4.2%.
AMD: Chipmaker AMD has seen its share price soar 79% in 2020 so far, while its key rival Intel has slumped 22%. AMD delivers its quarterly earnings today after Intel reported its own disappointing quarterly update last week, and investors will be watching for signs that the company is capitalising on the struggles of its rivals. On Monday, Susquehanna analyst Christopher Rolland increased his price target on AMD’s stock to $95 from $85, versus its $82 Monday closing price. Currently, 15 Wall Street analysts rate AMD as a buy or overweight, 21 as a hold and three as a sell.
Crypto corner: Bitcoin whale makes biggest value transfer in history
An unknown so-called bitcoin ‘whale’ has moved $1.15 billion-worth of the cryptoasset, according to CoinTelegraph, paying only a tiny fee for the exchange.
On-chain data for bitcoin shows that an unknown user transferred 88,857 bitcoins between wallets. It is believed to have been transferred by a Xapo wallet holder. Whoever made the transaction paid only a tiny relative fee of just 0.00027847 BTC, or $3.58.
The transfer is the largest ever if counted by fiat currency value. However it is not the largest ever bitcoin transaction per se. This distinction is held by a 550,000 bitcoin transaction made on the Mt Gox exchange on 16 November 2011 – when the fiat value would have been around $1.32 million. That much bitcoin would today be worth around $7 billion.
All data, figures & charts are valid as of 27/10/2020. All trading carries risk. Only risk capital you can afford to lose.