News

Coronavirus fears slide so stocks surge, Tesla dips

CMC Markets

Stock markets in Europe are in positive territory as there is chatter that progress has been made in relation to the coronavirus crisis. 

Europe

An unconfirmed report from China has claimed that a research team at Zhejiang University has made progress in relation to a drug that is designed to tackle the situation. In addition to that, Sky News ran a report stating that a ‘significant breakthrough’ has been made in relation to a vaccine for the deadly virus. The World Health Organisation clarified there are ‘no known effective therapeutics’ for the virus, but the bullish mood can’t be contained. Sentiment has been lifted as traders are less fearful about the health situation now. China’s Xi Jinping has made it clear the country will continue to apply strict controls in a bid to contain the situation, and that has reassured traders too.    

Barratt Developmentsshares are on a roll as the stock has racked up yet another all-time high. The UK housing market was a little subdued on the run up to the general election in December, but Barratt’s share price was jolted higher by the big majority the pro-business Conservative party secured. The company confirmed that first-half revenue as well as net profit increased by 6.29% and 3.7% respectively. The home builder is hoping the Tory government will bring in polices that are aimed at getting younger people on the housing ladder. It is worth noting that Barratt has benefitted greatly from the help-to-buy scheme, and the share price has more than tripled since March 2013 – when the scheme was announced.   

A crack-down on vaping has hurt Imperial Brands .The tobacco giant issued a profit warning this morning, and the company cited tougher regulation in relation to vaping as well as weaker customer demand for the downbeat update. The firm now predicts that full-year earnings are going to be down roughly 10%. In Western societies smoking has become less popular, so the likes of Imperial Brands have had expand in emerging economies as well as investing in alternative products like vaping and cigarettes. Sticker rules have come into play in the US regarding vaping following a number of deaths related to the vaping, hence why Imperial Brands have lowered their guidance.

BNP Paribas shares are showing modest gains this afternoon following a respectable set of numbers from the bank. Net income for the period topped the €1.73 billion forecast by coming in at €2 billion. Revenue in the three month period rose by over 11%. In the wake the credit crisis as well as the eurozone debt crisis, banks have keen to beef up their balance sheet. BNP Paribas confirmed the strength of its balance sheet marginally improved as the CET 1 ratio edged up to 12.1% from 12%. The investment and corporate banking division registered a 30% jump in revenue.  

US

The Dow Jones is above 29,000 and the S&P 500 is comfortably above the 3,300 mark – an indication of the bullish sentiment. The rebound has been largely driven by the fall off in the concerns surrounding the health situation in China. The strong ADP employment report added to the bullish sentiment too. The update came in at 291,000, which comfortably topped the 156,000 forecast.

Tesla shares are in the red this afternoon after closing higher for five consecutive days. Yesterday the stock cleared the $900 mark, and at one point it traded close to $970, but it finished well off the highs of the session. Today the stock is sub $800.

Disney posted impressive first-quarter figures last night but the stock is slightly in the red today. Revenue was $20.86 billion which topped the $20.79 forecast. EPS came in at $1.53, and the consensus estimate was $1.44. In November the group launched its streaming services, and the service had 10 million subscribers from the get go, and now that figure has jumped to more than 26 million. The aspect of the business will be closely watched from now on as the industry is competitive.

Snap posted mixed figures last night, hence why the stock is in the red. EPS was 3 cents, topping the 1 cent forecast. Daily active users exceeded forecasts, but the average revenue per user metric fell short of forecasts, it came in at $2.58, while traders were expecting $2.62. Total revenue for the quarter jumped by 44% to $561 million, but the consensus estimate was $563 million.    

FX

GBP/USD as well asEUR/USDare in the red on account of a rally in the US dollar. The very impressive US ADP employment report hammed home the point that the US labour market is strong, so traders snapped up the greenback on account of the news. The UK services sector saw an increase in activity last month as the final reading of the PMI reading was 53.0, an improvement on the 52.9 posted in December. The news was initially well received but the dollar’s rally took over. The German services sector along with the Italian services industry are in good health as the readings were 54.2 and 51.4 respectively, while the French reading was 51.0      

Commodities

WTI and Brent crude have surged as traders are hopeful the health crisis in China will be contained as there has been chatter of progress being made in relation to medication to treat coronavirus. Oil was coming from a low base to begin with so the optimistic noise about a drug for the virus sparked bargain hunting.

Gold is higher this afternoon despite the rally in stocks as well as the US dollar. Traders are clearly in risk-on mode as stock markets in Europe as well as the US are in positive territory, so it is strange that gold is in demand too, especially in light of the fact the US dollar index is up also.

 


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