When compared with the excitement from Friday’s US jobs report, it has been a quiet trading session.

Indices started off in the red, but as the day went on sentiment turned positive. In the last hour, equity benchmarks traded lower after Peter Navarro, US trade advisor, claimed that China are trying to steal US vaccines via intellectual property theft. The advisor to the Trump administration soured the fragile sentiment in stocks, as the commentary could lead to a renewed increase in US-China tensions.

Earlier today, the mood was influenced by the US labour data that was posted at the end of last week. The unexpected creation of 2.5 million jobs and dip in unemployment to 13.3% - although the report said there was a 3% margin of error – has left dealers hopeful that we are over the worst of the economic misery.   

It was reported over the weekend that last month AstraZeneca approached US-listed Gilead Sciences about a merger, but apparently the latter were not interested. The news raised a number of eyebrows as some traders questioned Astra’s logic, seeing as both companies are working on potential treatments for Covid-19. A tie-up between firms tends to be more attractive when they have products that complement each other, while too much overlap can make the offer less attractive. Given there are high hopes for Gilead Science’s drug – Remdesivir – US authorities would probably want to keep the group out of the hands of foreign influence. A few hours ago, it was confirmed that Astra and Gilead are not in merger discussions.

Restaurant Group shares are in demand today after the group confirmed it is in discussions with landlords about potentially restructuring lease agreements in relation to leisure sites. The company said the talks will not impact their airport sites, pub operations or Wagamama. Restaurant Group is the parent of Frankie and Benny’s, and last week it warned that up to 50% of those outlets might not reopen. The hospitality sector is under huge pressure because of the pandemic, so in turn that puts pressure on certain aspects of the commercial property market too. Landlords are in a tough position as they won’t want to collect lower rents, but if businesses don’t reopen, then they could find themselves without tenants for many months, or perhaps longer, so a compromise in relation to rent might be the best way forward for both parties.   

Earlier today there was a push higher in the underlying oil market, due to the OPEC+ decision to extend the massive production cuts. The group of oil producers agreed to extend the very deep output cuts into July, hence why the likes of BP, Royal Dutch Shell, Tullow Oil, and Wood Group – the oil field services firm – are higher. It was reported earlier today that BP will cut roughly 15% of its workforce.

Premier Oil shares are higher today too. BMO and Berenberg lifted their price target for the company from 30p to 40p.    

Stocks that are in the tourism and hospitality trades are largely in demand today as there are hopes the sectors will get some business during the crucial summer months. BA’s parent, IAG, Wizz Air and TUI are up on today. Carnival, the cruise operator, is enjoying another decent rally – it’s up over 50% in the past week. The UK government require that people self-isolate for 14 days on arriving in the country, but that hasn’t dampened the bullish mood in the travel sector.

Pub groups like Wetherspoon and Mitchells & Butlers are up on the back of optimism that pubs might be able to reopen in 2 weeks. It was reported that government ministers might look to bring forward the reopening date of pubs and restaurants to late June, but nothing has been confirmed yet.    

US

The S&P 500 is up slightly despite the update from Mr Navarro. The well-received jobs report from Friday is still playing on traders’ minds. The fact the US managed add well over 2 million people to the payrolls has highlighted that the easing up of lockdown restrictions is paying off. Unless there is a second wave of infections, the US seems as if it is on track to keep loosening lockdown restrictions, and should that be the case, further gains in equities might be in the offing.     

Gilead Sciences’ shares are slightly higher this afternoon even though it was confirmed they are not in merger talks with AstraZeneca. The news might spark M&A chatter in the sector as other firms might seek to expand.   

Tesla sold over 11,000 Shanghai-made Model 3 vehicles in May, according to the China Passenger Car Association. The May figures equate to a 205% growth rate when compared with the April reading.  

The travel sector is gaining ground again as traders are taking the view the reopening of economies will breathe some life into the sector. Last week American Airlines, United Continental plus Norwegian Cruises released optimistic plans in relation to getting their businesses back to normal. Traders are taking the view that tourism will see some modest activity this summer. Las Vegas Sands shares are higher for the same reason.  

FX

The slide in the US dollar has helped GBP/USD and EUR/USD. The greenback has been in a negative trend recently as it declined for over one week, and it took the much-better-than expected US jobs data to push up the currency, and now it has fallen yet again. It is worrying the US dollar couldn’t move higher for a second day in a row in light of the jobs numbers.

It has been a quiet session in terms of economic announcements. Canada’s housing starts from May came in at 193.500, which easily topped the 155,000 that economists were expecting. Earlier in the day, the oil market was higher so that was also a factor in USD/CAD’s dip.      

Commodities

Brent crude and WTI have retreated from their three-month highs. The decision by OPEC+ to continue with its very deep production cuts boosted the energy markets. Once the OPEC+ stance was mapped out, it was then confirmed that Saudi Arabia, Kuwait and UAE will not be introducing any voluntary cuts for July, so this gave the oil bulls an excuse to book some profits. The reopening of economies should continue to fuel chatter about oil’s demand.

Gold has rebounded from its lowest level in over one month. The metal is in demand today as there is an absence of risk-on sentiment. The very bullish moves that were posted in stock markets on Friday encouraged people to dump gold, but now we are seeing traders move money back into the metal. The dip in the US dollar has helped gold also.

 

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