Stock markets are set to finish higher today and that will round off a positive week. 

Europe

Volatility has been low as the US stock market will close early today. Yesterday the US celebrated Thanksgiving and global markets were very quiet as a result and today isn’t much different.

Global equities were given a lift during the week on the back of the news that AstraZeneca-Oxford University’s possible Covid-19 drug was reported to have a high effective rate. On top of that it is believed to be very cheap when compared with other drugs, and it can be stored at roughly -3 degrees, which makes it attractive from a transportation and manufacturing point of view. Recently there have been questions over the effectiveness of the drug and some medical experts questioned if the US regulators would approve the product. AstraZeneca shares are flat on the day.       

In light of the new restrictions that will come into play in England next month, JD Wetherspoon, issued a business update – which was highly critical of the new rules. The announcement said that the new regulations are extremely disappointing seeing as there isn’t much medical evidence that the coronavirus is easily transmitted in pubs – it claims that households and shops have a worse track record. The firm said that 366 of its pubs will remain closed – that vast majority are in tier 3 England. 418 pubs are in tier 2 England and 17 are in Scotland and must abide by restrictions similar to England’s tier 2. Only 64 pubs, across England and Wales, can operate under the lightest regulation, so it will be a difficult few weeks for the company and it competitors.

Recently it was announced that BBVA SA SE and Banco de Sabadell were in merger talks. The update came around the same time that BBVA confirmed it was selling off its US operation to PNC Financial Services for $11.6 billion as the Spanish bank wanted to exit the relativity overcrowded American retail banking market. BBVA is more than ten times bigger than Sabadell in terms of market capitalisation so the interest in acquiring it didn’t seem that strange. Today it was revealed that BBVA-Sabadell merger talks are off, weighing on Sabadell’s share price. It is possible that BBVA wants to play the wait and see game in terms of how things pan out for bad debts. A few hours ago it was announced that Sabadell are looking to spin off its UK division, TSB.

Capita Group, the outsourcing group, confirmed it is in talks with the private equity firm Montagu, about potentially selling its educational software solutions business. Capita has suffered on account of the pandemic and in recent months they have declared their desire to spin-off non-core assets in a bid to pay down debts and pension liabilities. Despite the fact that Capita’s share price has recovered a little from the lows of February, it is still down over 70% from the pre-pandemic level so a cash injection from an asset sale would probably go a long way to restore some confidence in the company. 

Indivior PLC shares have slumped as Reckitt Benckiser is seeking to claim £1.07 billion from the group. It is connected to the demerger between the firms in 2014.                  

US

Stocks are showing modest gains amid a quiet session. There is growing optimism that President Trump will leave office quietly. The Donald said that if the Electoral College recognises the Biden victory, he will accept the result. Sentiment is being helped by the update as it appears it will avoid a legal battle. 

Walt Disney shares are down slightly after the company will cut an additional 4,000 jobs, bringing the recent redundancy announcements to 32,000. The extra round of cuts highlights the pain felt by the group. The theme park business has been hammered by the health crisis. In the latest quarterly update, Disney+, the streaming service, boasted a stellar set of numbers and that should help weaker parts of the business.

Sorrento Therapeutics Inc shares have jumped on the back of the news that it was awarded a $34 million contract with the US Department of Defence for work on a Covid-19 antibody. Should the clinical trials be successful, it will look for additional support.

US retailers are relatively muted today even though it is “Black Friday” a day of aggressive discounts. The event seems to have lost some of its appeal in recent years because of online shopping and companies have started offering their discounts over a period of time rather than just one day.              

FX

The CMC GBP index is in the red as the UK-EU trade negotiations are still dragging on. Once again the topic of fishing is an area that both sides can’t agree upon. The prospect of a no-deal outcome is real but keep in mind that the currency index hit its highest level since early September during the week so traders are not that worried about a no-deal outcome or else they believe a compromise will be achieved at some point.

EUR/USD hit a 12 week high thanks to continued weakness in the US dollar. The final reading of French GDP for the third quarter was 18.7%, up from the preliminary level of 18.2%. In addition to that, the preliminary CPI reading for November was 0.2%, up from 0.1% last month.

Bitcoin (USD) is a little lower today but it is still above the lows of yesterday. Volatility has dropped greatly from yesterday when it endured a painful fall.  

Commodities

Gold has taken another negative move and is has fallen below its 200-day moving average – for the first time since March. The yellow metal had a bullish run during the summer as a weak US dollar and fear surrounding the health crisis prompted people to channel funds into gold as it is deemed to be a lower risk investment. Now that there is growing optimism with respect to vaccines, some investors are cashing in their gold exchange traded funds (ETFs) and buying into traditional industries like airlines and leisure – hence the pressure on gold.

WTI and Brent crude are mixed today after enjoying a very bullish run this week – the contracts hit their highest levels since March. Hopes with respect to a coronavirus vaccine and talk that OPEC+ will maintain their relatively strict output level into the New Year has lifted the oil market. Lately there have been some creeping oversupply concerns because of Libya’s output.