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Markets muted amid US holiday, oil retreats

Markets muted amid US holiday, oil retreats

European stock markets are largely a little lower again as traders continue to take profit from the strong gains that were posted on Tuesday. 


The mood was bullish earlier in the week as traders welcomed the upbeat coronavirus vaccine news from AstraZeneca-Oxford University. Hopes that there would be a straightforward transition of power from President Trump to President-elect, Joe Biden, was also a factor in the upward move. The FTSE 100 is underperforming when compared with markets in mainland Europe as oil, mining and banking stocks are in the red.

The US stock market is closed today as it is Thanksgiving and when the US is on holiday that usually equates to low volatility across the board which is what we are seeing today.

It was confirmed that reasonably tight restrictions will remain in place in London when the England-wide lockdown ends early next month, and many cities in northern England will have even stricter rules than the capital. Pub groups are under pressure as they will be allowed to open, but they will not be permitted to operate as freely as they did in the summer. Marston’s shares are down 3%.        

The pub sector has been hammered by the pandemic and that was reflected in the awful full year figures from Mitchells & Butlers as revenue fell by 34.1% to £1.47 billion. The statutory loss was £123 million and that was a big swing from the £177 profit posted last year. Adjusted operating profit – which excludes exceptional items – dropped by 68.8% to £99 million. As a reaction to the depressed market, the company announced that it will close a number of sites, which will equate to 1,300 job losses. Cash flow was £127 million, down 53% on the year, which isn’t too bad considering the lockdowns. The firm has £158 million in cash and equivalents, and it has access to £140 million in credit, so it is in a comfortable position from a liquidity perspective.

Bodycote specialises in thermal heating, metal joining and coating, and the company also suffered as a result of the health emergency. Today’s trading update covered the four months until October and group revenue fell by 20% to £193.6 million. The civil aerospace division was the hardest hit because and like-for-like revenue fell by 50%, the energy unit registered an 18% fall in revenue. On the bright side, the cars and trucks division registered an 11% fall in revenue, which was a big rebound from the 50% fall registered in the second quarter.

Aviva was in the news recently as it sold off the entirety of its 80% stake in Aviva Vita to its partner UBI Banca for €400 million. In September the company disposed of its Singapore business. The company wants to focus on its core markets, the UK, Ireland and Canada.  Today the group issued a three month trading statement. In the first nine months of the year, the UK and Ireland unit saw a 40% rise in new business sales. Aviva Investors saw third party net flow of funds of £1.2 billion in the nine month period. The general insurance business saw net written premiums of £7.1 billion for the nine months and that was a slight improvement on the £7 billion posted last year. Costs related to the coronavirus crisis are £100 million. The dip in economic activity in the third quarter brought about lower claims. The company will pay an interim dividend of 7p, and it intends to pay a final dividend of 14p, which would bring the final pay-out to 21p. Keep in mind the total dividend in 2018, pre-coronavirus, was 30p.

DCC PLC GB shares have been given a lift by Morgan Stanley who have upped their rating for the company to overweight from equal weight.

Morgan Stanley trimmed their price target for Virgin Money UK PLC from 150p to 145p. The move comes one day after Virgin announced that it had set aside just over £500 million for bad debts on account of the Covid-19 crisis. Profit at the bank tumbled by 77% to £124 million.  

Boohoo shares are up a little on the back of the news the company has hired Sir Brian Leveson, a former High Court judge, to oversee its supply chain practices. The fashion house was rocked by allegations that some of its third party suppliers were in breach of employment laws. An independent inquiry found there was no wrong-doing by Boohoo and the Leveson hire is a further step to enhance the group’s image.   


The US stock market is closed today as the country celebrates Thanksgiving.


The dollar index is a touch higher on the session but earlier on it fell to its lowest level since early September. In recent months the dollar has been a common safe haven trade, and therefore it suffered when the likes of the Dow Jones and the Russell 2000 hit record highs this week. Last night the Federal Reserve released the minutes from the meeting that was held at the start of the month. The central bank indicated it is considering assisting the economy by adjusting its stimulus package – either through additional bond purchases or perhaps buying more long-dated bonds. In light of the update, the dollar is likely to remain under pressure. GBP/USD and EUR/USD are in the red slightly on account of the move in the greenback.

The CMC JPY index has gained the most ground out of all the major currency indices as the yen is benefitting from the flight to quality play since equities are off their highs of the week.    

Bitcoin-usd has taken a beating today on the back of profit taking. The cryptocurrency has enjoyed an extremely bullish run recently and yesterday it came within 1% of the all-time high that was posted in December 2017. 


Gold is a touch higher on the back of a mixture of safe haven buying and bargain hunting. It would appear that funds are flowing from risker assets like stocks and into the yellow metal. On Tuesday the commodity tumbled to a four month low. If it holds above the $1,800 mark, it might look to retest the $1,850 zone.

WTI and Brent crude are in the red after retreating from the eight month highs that were posted yesterday. The wider bullish moves that were seen this month were fuelled by hopes of a Covid-19 vaccine and increased speculation that OPEC+ will keep production squeezed by not easing up on production cuts.           

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