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Election rally slows as arduous counting process continues

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US stock futures have stalled after rallying strongly this week during the aftermath of the US election. As Trump prepares a legal challenge we could well see some volatility in the days to come.

Markets continued their election-induced rally yesterday, as Joe Biden edged towards the presidency in a nail-biting, drawn out race. Once again technology names surged, with the S&P 500’s information technology sector up 3.1%. Thursday’s rally meant the S&P 500 has now posted 1% plus gains for four days straight. According to Bloomberg reporter Sarah Ponczek, that has only happened three other times in the index’s history, with those all happening in the Seventies and Eighties. Since the start of the week, the S&P is up by more than 7%.

Yesterday in the UK, the Bank of England’s (BoE) Monetary Policy Committee kept interest rates set at 0.1% but the central bank announced a new round of bond buying as England locks down once more. BoE Governor Andrew Bailey, vowed to do “everything we can” to support the economy, and committed to another £150 billion of UK government bond purchases.

Qualcomm surges on 5G optimism

Beyond technology stocks, 10 of the S&P 500’s 11 sectors were in the green yesterday, with the materials, consumer discretionary, financials and industrials sectors all up by more than 2%. All three of the major US stock indices gained 2% or more, with the Nasdaq Composite the biggest winner at +2.6%. Chipmakers Qualcomm and Micron helped the Nasdaq higher, gaining 12.8% and 5% respectively after Qualcomm delivered an expectation beating earnings quarter. “We believe the stars are aligning for Qualcomm, with a multi-year global 5G cycle starting to ramp,” Bank of America analysts wrote in a Thursday note, according to CNBC.

In other earnings news, Uber’s share price fell slightly as it reported quarterly earnings, after its Wednesday surge on the back of a victory in its California battle to avoid classifying workers as employees. In Q3, the firm said its food delivery business was still outperforming its ride business, with overall revenue down 18% to $3.1bn year-over-year.

S&P 500: +2% Thursday, +8.7% YTD

Dow Jones Industrial Average: +2% Thursday, -0.5% YTD

Nasdaq Composite: +2.6% Thursday, +32.5% YTD

UK stocks react positively to BoE stimulus news

The bond-buying boost announced by the Bank of England yesterday was bigger than expected and, along with Joe Biden’s continued progress towards the US presidency, that helped to buoy UK shares. The bank said that announcing further bond purchases now “should support the economy and help to ensure the unavoidable near-term slowdown in activity was not amplified by a tightening in monetary conditions.” In addition, the central bank said that it now expects the UK economy to not reach its pre-pandemic size until Q2 2022.

On Thursday, the FTSE 100 ended the day 0.4% higher, while the FTSE 250 gained 0.7%. The FTSE 100 was led by RSA Insurance group, which jumped by more than 40% after receiving a takeover offer. At the bottom of the index was Rolls-Royce, which fell double digits after announcing another round of job cuts.

FTSE 100: +0.4% Thursday, -21.7% YTD

FTSE 250: +0.7% Thursday, -18.1% YTD

What to watch

US jobs report: Although it will likely be overshadowed by the continuing presidential election saga, the US’ monthly jobs report will be reported today. Investors be will watching for signs that the US economic recovery is slowing, with 593,000 non-farm payrolls expected to have been added in October versus 661,000 in September. Weekly initial jobless claim figures reported yesterday showed that the level of Americans filing for new unemployment benefits held roughly steady versus the previous week’s number.

CVS: Pharmacy store chain and benefits manager CVS’s share price has fallen by more than 17% in 2020 so far, although it has gained close to 10% over the past five days as part of the broader market rally. The firm will deliver its third-quarter earnings release today; key points to watch will be the level of walk-in appointment traffic at its stores. Currently, 21 Wall Street analysts rate the stock as a buy or overweight, and eight as a hold.

Marriott International: Following key rival Hilton’s earnings report earlier in the week, in which it beat expectations thanks to improving hotel occupancy and notable progress in its development of new properties, Marriott International will deliver its own quarterly update today. Similar to Hilton, occupancy rate and news on how the firm’s properties are performing globally as economies reopen will be key points to watch. Analysts lean towards a hold rating on both stocks, with Marriott anticipated to deliver a loss for Q3.

Crypto corner: cryptoassets continue surge to new highs

Bitcoin has breached another high, hitting $15,977 overnight, its highest fiat currency value since December 2017.

The world’s largest cryptoasset has been on a tear since the beginning of October and is now up around 45% in the past month. The cryptoasset has not reached such levels since its first monumental price surge in 2017.

Meanwhile, ethereum has also seen a surge in value, up 12% in the past seven days, although its current price of $434 does not represent as spectacular a rise as bitcoin’s. In the past year, ethereum has been valued as high as $488 at the beginning of September but has since struggled.

Finally, XRP is in fact down slightly over the past month. The cryptoasset is now trading around $0.25, still off its year-to-date peak of $0.33 reached in February.

All data, figures & charts are valid as of 06/11/2020. All trading carries risk. Only risk capital you can afford to lose

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