Tesla nears $500bn market cap as markets rally on Trump power transfer

European markets have maintained yesterday’s momentum with news of easing lockdowns in the UK and France adding to the optimism.  The FTSE is up 0.5%, the Dax up 0.4% and the Dow Jones leading way in the US futures market up 1%.

Markets around the world rose on Monday and overnight as further vaccine news, and a hint from outgoing President Trump about a smooth transition of power, all stoked the current rally.

Trump reportedly said he had recommended the General Services Administration, which helps transition to the new presidential regime, “do what needs to be done with regard to initial protocols”. The news helped calm fears about a disorderly handover of power to incoming President Joe Biden.

Elsewhere, AstraZeneca and the University of Oxford announced on Monday that their coronavirus vaccine is up to 90% effective, adding a third vaccine to the ones already announced by Pfizer and Moderna.

The latest pair provided more data than Pfizer and Moderna, and revealed an average efficacy of 70%, depending on the dosages given and time between doses. Crucially, AstraZeneca’s vaccine can be stored at refrigerator temperature, rather than requiring the extreme cold storage that poses a logistical challenge for the Pfizer and Moderna vaccines.

US markets closed higher in reaction, with the S&P 500 up 0.5% yesterday, before shares in Asia followed suit, with the Japanese Nikkei up 2.5% and Hong Kong’s Hang Seng up 0.1%.

Among standout shares, Tesla’s share price passed the $500 milestone for the first time, pushing its market cap close to $500bn. The leap came after analysts at Wedbush raised their bull-case price target on the stock to $1,000. The firm highlighted that currently, 3% of all auto sales are electric, a number it expects to more than triple to 10% by 2025.

Energy sector stocks jumps 7% to start week

On Monday, the Dow Jones Industrial Average led the way in the US with a 1.1% gain, versus +0.6% for the S&P 500 and +0.2% for the Nasdaq Composite. The top of the S&P 500 was dominated by energy names, with Occidental Petroleum, Apache, Marathon Oil and more all delivering double-digit gains after oil continued to hold well above the $40 a barrel mark. Overall, the S&P’s energy sector delivered a 7.1% gain on Monday. In the Dow, Chevron led the way with a 6.1% gain, taking its rally over the past month close to 30% and paring its year-to-date loss back below the 25% mark. Tech firms suffered a tougher day, with Apple down 3% and Netflix off by 2.4%, weighing on the technology-heavy Nasdaq Composite index.

S&P 500: +0.6% Monday, +10.73% YTD

Dow Jones Industrial Average: +1.1% Monday, +3.7% YTD

Nasdaq Composite: +0.2% Monday, +32.4% YTD

AstraZeneca slips despite vaccine news, oil giants rally

London-listed shares were mixed on Monday, as alongside the AstraZeneca vaccine news there was new economic data that showed UK business activity shrunk in November — the first time since June that there has been a contraction. The FTSE 100 closed the day 0.3% lower, with AstraZeneca’s 3.8% loss proving one of the biggest drags on the index. Also towards the bottom of the pile were miners Polymetal and Fresnillo and safety equipment maker Halma. At the top of the index, Royal Dutch Shell, BP, International Consolidated Airlines Group, Rolls Royce and Lloyds all gained between 4% and 8%. The FTSE 250 was positive on Monday, led by Cineworld, which jumped 20% after it secured a financial lifeline in the form of a new debt facility. Travel firm Tui and airline easyJet also helped the index higher, with gains of 8.1% and 6.4% respectively.

FTSE 100: -0.3% Monday, -16% YTD

FTSE 250: +0.4% Monday, -10.5% YTD

What to watch

Best Buy: Electronics retailer Best Buy has gained 39% this year, and more than 64% over the past 12 months, as mass working from home has led to a surge in demand for laptops, monitors and other consumer electronics. The firm delivers its latest quarterly earnings update on Tuesday, just days ahead of Black Friday, a critical day in the retail calendar. Analysts are expecting the company to deliver an earnings per share figure of $1.71, up on their expectations from a few months ago. Currently, analysts are split between buy and hold ratings on the stock.

Dell Technologies: Similar to Best Buy, Dell has climbed 35% this year. The company will deliver its third-quarter earnings on Tuesday, with PC and server sales in focus, along with a proposed spring-off of the company’s 81% stake in cloud software firm VMWare. While business spending on computer equipment has been hurt by the pandemic, there is huge demand for servers from cloud providers. Investors will also be looking at how sales have stacked up versus Hewlett Packard, which reports earnings on the same day. Wall Street analysts are split between buy and hold ratings on the stock.

Autodesk: Software firm Autodesk provides products for industries including engineering, architecture and product design, with Tesla one of the users of its services. The company’s share price is up 40% over the past 12 months, taking its market cap past the $50bn mark. Autodesk delivers Q3 earnings on Tuesday, with the firm’s progress in cloud-delivered software, and whether it has been hurt by reduced business spending key points to watch. Currently, 14 analysts rate the stock as a buy or overweight, four as a hold and two as an underweight or sell.

Crypto corner: Analyst says bitcoin “replacing gold” after huge difference in returns

Bitcoin’s status as a safe haven is taking on renewed impetus following a rollercoaster period for the cryptoasset, with one analyst labelling it a replacement safe haven.

Bloomberg analyst Mike McGlone has reportedly claimed that rising Futures “open interest and investor inflows” into bitcoin stand in stark contrast to demand for gold, during the pandemic period. With this dynamic new to the market (bitcoin having not been around in the last crisis), McGlone says this could give bitcoin an added edge in price appreciation.

Currently this story is playing out clearly, with gold up just 20% year-to-date versus bitcoin’s 150% gain.

Elsewhere, the altcoin rally is continuing to gather pace, we have seen this before where there is a delayed reaction to an initial move in bitcoin. XRP is up a further 23% this morning and the offer has been as high as $0.72. The biggest riser is XLM up a whopping 43% trading at $0.174.

All data, figures & charts are valid as of 24/11/2020.

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