Markets pop as central banks keep up stimulus measures
European markets have opened positively after the US reported that an additional 1.5 million people filed for unemployment benefits this week, despite economies in all states attempting to reopen in some format. That takes the total number of people who have filed for unemployment past 45 million in the past three months, but this week’s figure was an improvement of 58,000 on last week.
No individual week has come close to the 6.6 million unemployment filings in the week beginning March 30. There can be significant disparities between the filing figures and the actual unemployment rate, but the weekly number is still closely watched. While the economy has been reopening, the process has been uneven. For instance, in some locations bars and restaurants are slowly returning to normal, but cinemas, gyms and other businesses still face major restrictions. The likely unemployment rate in May – following an error in the reported figure – was likely north of 16%, and the Fed expects it to still be above 9% by the end of the year.
Amid the latest jump in jobless numbers and a fairly quiet day in US markets overall, Asian markets made some headway overnight, with the Hong Kong Hang Seng up 1% and Japan’s Nikkei finishing the week up 0.6%.
Energy names buoyed by oil price on middling day for US stocks
Thursday was a rare quiet one for major US indices, with the S&P 500 up 0.1%, the Dow Jones Industrial average down 0.2% and the Nasdaq Composite finishing in the green with 0.3%. Sector wise in the S&P 500, energy stocks were a standout on the positive end, climbing 1.2% on aggregate, while real estate names fell hardest at a 1.3% loss. Among energy names, Phillips 66, Valero Energy and Marathon Petroleum were among those that closed the day higher, all up more than 3%. A jump of more than 2% in the price of oil, taking WTI crude prices back towards $40 a barrel, was a likely catalyst.
At the bottom of the S&P, Biogen had a difficult day, losing 7.5% from its share price after losing a court case with rival Mylan. The case related to a patent Biogen held on a multiple-sclerosis treatment that has been a major driver of the business. In earnings news, grocery and retail giant Kroger posted revenue and profit expectations that beat analyst targets on Thursday but suffered a negative reaction from shareholders due to removing its financial guidance.
S&P 500: 0.1% Thursday, -3.6% YTD
Dow Jones Industrial Average: -0.2% Thursday, -8.6% YTD
Nasdaq Composite: 0.3% Thursday, 10.8% YTD
Bank of England to inject another GBP100bn to support economy
The Bank of England said yesterday that it will pump an additional GBP100bn into the UK economy to combat the damage being done by the pandemic, with the central bank’s Monetary Policy Committee voting eight to one in favour of the action. Earlier in the week, the Bank’s governor, Andrew Bailey, made it clear that it is ready to take further action to mitigate the economic fallout. In stocks, the FTSE 100 fell by 0.5%, while the FTSE 250 closed the day 0.4% lower.
The biggest losers in the FTSE 100 were housebuilder Taylor Wimpey and asset manager Intermediate Capital Group, which both lost more than 5%. For Taylor Wimpey the loss came after it announced that it had raised more than GBP500m in a share placement. The placement price was at a 4% discount to the firm’s closing price on Wednesday. One of the most interesting stories of the day in Europe was German-listed payments firm Wirecard, which saw its share price plummet by more than 60% after revealing that more than two billion euros in cash is missing. Auditor EY said it couldn’t find the cash balance, which is equivalent to around a quarter of the firm’s balance sheet.
FTSE 100: -0.5% Thursday, -17.5% YTD
FTSE 250: -0.4% Thursday, -20% YTD
What to watch
Carmax: Over the past three months, Carmax has delivered an astonishing recovery. Its share price is up 11.7% year-to-date but has gained more than 100% in the past three months alone to dig itself out of a deep hole. The firm, which provides an online marketplace for buying and selling used and new cars, reports its latest set of quarterly earnings on Friday. Currently there is no one single dominant player in the US used car business, and the company has been working through a major makeover to position itself to fill that void. Currently, 13 analysts rate the stock as a buy, one as an overweight, and one as a hold.
Quadruple witching: This is not normally an event to watch, but it’s worth being aware of, given the huge volatility and price dislocations that have been witnessed in markets in recent months. The term refers to the expiration, simultaneously, of stock options and futures contracts. “Expirations tend to be volatile by their nature, and I would suspect this go around will likely be no exception,” one industry expert told MarketWatch.
Crypto corner: Bitcoin “not a top ten” cryptoasset says China
Bitcoin is not the top cryptoasset, according to a new Chinese report that ranked global cryptoassets based on their technical merits.
According to a report from China’s Centre for Information and Industry Development (CCID) Bitcoin, the world’s oldest and largest crypto asset by market cap, ranked 12th.
The rankings have been published in the 18th edition of the CCID Global Public Chain Technology Evaluation Index. The index judges cryptos based on their blockchain’s basic tech, applicability and creativity. Basic tech evaluates the function, performance, and security of the blockchain; applicability evaluates if these blockchains support actual applications; creativity or innovation refers to developer scale, code update, and code influence.
Bitcoin was up just two places from the previous evaluation. According to a report in the International Business Times, which cited CoinTelegraph, the top five tokens remained the same from the previous evaluation — EOS, Tron, Ethereum, IOST and Link.
All data, figures & charts are valid as of 19/06/2020. All trading carries risk. Only risk capital you can afford to lose