News

FTSE outperforms, Palantir falls, oil rallies

CMC Markets

The FTSE 100 is outperforming its Continental counterparts thanks to a rally in pharma, commodity and banking stocks.  

Europe

BP and Royal Dutch Shell are up on the day on the back of the rebound in the underlying oil market. BHP Group, Anglo American and Rio Tinto are the biggest rises in the mining sector. AstraZeneca and GlaxoSmithKline are higher on the back of the optimism in relation to the Pfizer-BioNTech vaccine being granted authorisation in the UK.

When it was announced that the British authorities authorised the coronavirus vaccine, from Pfizer-BioNTech, it helped UK travel, transport and hospitality stocks, but those industries are a little mixed now. Within the hospitality sector, Marston’s and Mitchells & Butlers are still up on the session while JD Wetherspoon is in the red. UK transports stocks National Express, FirstGroup and Go-Ahead Group are all up on the day, thanks to the vaccine story.  

G4S shares hit their highest level in over one year on the back of the revised and final takeover offer from Gardaworld. In September, G4S was approached with a £3 billion offer which equated to 190p per share. The proposal was rejected as it was considered to be ‘opportunistic’ so now Gardaworld have has upped its offer to 235p per share and that values the firm at £3.7 billion. Schroders, the fund manager, who owns a 10% stake in G4S, said the new offer was fair. This time round Gardaworld only a need a majority of shareholder approval, when previously they required 90% approval. G4S shares are now up more than 220% from the lows of this year so the shareholders shouldn’t feel that they are being picked off at a cheap price.       

Tesco confirmed that it will repay £585 million in business rates relief. The supermarket giant saw a rise in demand for items amid the pandemic but there were downsides too. Tesco revealed that Covid-19 related costs came to £725 million, as the firm incurred extra expense like cleaning costs. John Allan, the Chairman, declared that the company is “financially strong enough” to return the cash, which projects a positive image to shareholders and taxpayers. Tesco came under pressure earlier this year when it paid a dividend as certain sections of the public were not happy about shareholders receiving pay-outs at the same time when taxpayers are effectively assisting the company in the form of the tax relief. Morrisons and Sainsbury’s might follow Tesco’s lead and return their rates relief too.

IWG-Plc shares are in the red on the back of the news that it announced £300 million in a convertible bond offering in a bid to raise cash. The group operates rented office space and that has been hit hard because of the pandemic, and the rise of working from home.

Wizz Air confirmed that passenger numbers tumbled by 84.7% in November. The horrendous figures highlight the chaos caused by the pandemic.        

US

Stocks are a touch lower this afternoon on the back of profit taking from the record level seen in the S&P 500 last night. The ADP employment report showed that 307,000 jobs were added last month, and that undershot the 410,000 that economists were predicting. The October report was revised higher to 404,000 from 365,000. Lately there has been some concerns that the US’s economic recovery is fading, and one could argue that is the case judging by the ADP update. 

Palantir shares have dropped over 12% on the back of a downgrade from Morgan Stanley.  The bank downgraded the stock from equal weight to underweight. It is worth noting that Citron Research were bearish on the stock last month so the contributed to the negative move.

Last night, Salesforce announced that it has agreed to acquire Slack Technologies for $27.7 billion. Salesforce’s third quarter revenue was $5.42 billion and that comfortably topped the $5.25 billion that equity analysts were expecting. The company predicts that fourth quarter revenue will rise by 17%.    

Pfizer Inc US shares are 3% higher on the back of the news that the UK has approved the drug they have developed with BioNTech as a vaccine against Covid-19.    

FX

EUR/USD has traded above the $1.21 mark as the continued weakness in the US dollar has boosted the single currency. The US dollar index is now largely flat on the day but it was in the red for much of the session, and it is lower in the wake of the ADP report.

The CMC GBP Index has tumbled by 0.7% today as traders are concerned about the continued bickering between the UK and the EU with respect to a trade deal. Once again, the topic of fishing continues to be a stumbling block. Sterling has fallen to a three week lows#. 

Commodities

Gold has built on yesterday’s gains and it has hit its highest level in just over one week. The commodity has been weak recently and it would appear that bargain hunting has been doing the rounds. The relatively low volatility in the dollar has assisted the metal today.

WTI and Brent crude are up on the session. It was reported a while ago that OPEC+ has made headway with respect to reaching an agreement on output for early 2021 and it seems that traders are taking that as a sign that some sort of output squeeze will persist. The energies are up over 1%. The EIA report showed that US oil inventories fell by 679,000 barrels while traders were expecting a fall of 2.35 million barrels – which could suggest weak demand.