Equities are showing decent gains and they are pushing higher as we near the end of the trading session. 

Europe

BioNTech and Pfizer Inc US are developing a drug that they are hoping will be a vaccine for Covid-19, and the companies said they would be happy to push for emergency use as soon as certain safety measures are achieved, and that could be as early as late November. Stocks were already moving higher this morning before the announcement, and that has added to the positive move. Whenever there is some optimistic news in regards to the health crisis, traders typically jump on the buying bandwagon, even though it is well-known that the pharma sector is prone to setbacks – as AstraZeneca and Eli Lilly found out recently.   

Rolls-Royce shares have rallied today on the back of the news that BAE Systems announced plans to build an aircraft called the Tempest – the project will create 20,000 new jobs between 2026 and 2050. Rolls-Royce will benefit from the programme as it will be a supplier. The news follows on from the positive funding story from Rolls-Royce yesterday, where the struggling engineering titan raised £2 billion from a bond issue and that was double what it intended to raise, so it does not need to extend an existing 5-year credit facility. The very positive response to the bond issuance reassured traders that the company has no problem tapping into cash.

Serco caught dealers by surprise this morning by raising its full year outlook. The outsourcing company upped its annual revenue guidance from £3.7 billion to around £3.9 billion, and the underlying trading profit forecast was £135-£150 million, and that has been revised to £160-£165 million. The group confirmed that trading across all regions has been ahead of expectations. When the pandemic took hold, Serco scrapped its dividend, which was very common at the time, but today it said it would review the situation in December, and that added to the already bullish update.

LVMH is in fashion on the back of the well-received third quarter update which was announced after the close of business yesterday. Group comparable sales in the three month period fell by 7%, beating forecasts. The fashion and leather goods division was the stand out performer of the group as like-for-like sales increased by 12%, and that keep in mind the consensus was for a 1% decline. The Vuitton business in China saw sales growth, and that speaks to a decent recovery in what is a very important market for the firm. The stock hit its highest level since January, and it is within touching distance of the record-high. Burberry shares have been lifted by the LVMH news.

Just Eat shares are up on the news that HSBC issued a buy rating for the company and set an 11,600p price target.

JD Wetherspoon shares have tumbled today after the pub chain posted a full year pre-tax loss of £34.1 million, and that was a big difference from the £102.5 million profit registered last year. The group cautioned that the new restrictions and the 10pm curfew have had a material impact on the business. Seeing as things are getting worse in terms of restrictions, the firm will probably suffer more.                   

US

The hopes relating to the BioNtech and Pfizer vaccine story is pushing up stocks. September’s retail sales report showed growth of 1.9%, and that was a big jump on the 0.6% registered in August. The reading that strips out auto-sales rose by 1.5%. It is encouraging to see that consumers are content to go out and spend as it bodes well for the recovery.  

The European aviation regulator has deemed that Boeing’s 737 Max aircraft is safe to fly. The aircraft in question was at the centre of two aeronautical disasters, and Boeing’s reputation was hammered because of safety concerns. The pandemic has caused havoc in the aviation sector so even if airlines are content to purchase 737 Max’s, the demand is likely to be low.

State Street shares are a little lower after a mixed third quarter update. EPS was $1.45, topping the $1.41 forecast. Revenue dipped by 4.1% to $2.78 billion, and that was slightly ahead of forecasts.    The ultra-low interest rate environment has hit the net interest margin again, as it came in at $478 million, down from $644 million last year.

FX

The US dollar is lower on the day as traders are turning their backs on assets that are considered to be lower risk. Yesterday, when stocks were in decline, the greenback hit its highest mark in over one week, and now it is in the red.  

Sterling saw an increase in volatility earlier today when the UK’s Boris Johnson announced that the country should prepare for an Australia style deal. The British premier implied the UK will and the EU will not strike a free trade agreement by the deadline, and that people should get ready for that as a potential outcome. There is still time to strike a deal, and that is probably why the pound hasn’t moved a huge amount.

Commodities

Gold is down on the day despite the dip in the dollar. Lately there has been a relatively strong inverse relationship between the metal and the greenback, but that doesn’t seem to be the case today. The commodity fell to a two month low at the end of last month and it has been broadly moving higher recently, and while it holds above the $1,900 mark, the uptrend should continue.

Brent crude and WTI have been hit by the health crisis. The rising number of new Covid-19 cases and the announcement of tighter restrictions in several countries has hurt the oil market. Adding to the selling pressure are the concerns that OPEC+ has in relation to excess supply.