Equity markets are enjoying a bullish run as optimism in relation to the drug stories surrounding Covid-19 is taking precedence over the health crisis. 

Europe

Pfizer and BioNTech are working together to produce drugs that will hopefully go on to be vaccines for Covid-19. Earlier today it was announced the Food and Drug Administration, the US regulatory body, has fast-tracked two of their four drugs. There are no guarantees that anything will come of this, but it’s a step in the right direction, and that has lifted market sentiment. On Friday, it was revealed that Remdesivir, the anti-viral drug produced by Gilead Sciences, can reduce the fatality rate in Covid-19 patients by 62%, so at the moment there is a sense of hope on the health front.      

G4S shares jumped today on the back of a positive statement. The group said it expects first half earnings to be significantly higher than the £159 million that equity analysts are predicting. In addition to that, the firm has brought forward the earnings release date to the week commencing 20 July. Seeing as the company issued a bullish update, some dealers will be wondering will it top last year’s metric of £212 million.    

Quiz, the Fashion House, has cut ties with suppliers that were accused of paying their workers below the minimum wage. The news hit Boohoo shares as a similar accusation was levied against them recently. Boohoo has refuted the allegations and it is currently conducting an investigation into its UK supply line. A number of high profile companies have distanced themselves from Boohoo, even though no evidence has been found that any of their suppliers has breached the minimum wages rule. The update from Quiz sparked renewed jitters in Boohoo’s shares price. Bank of America cut its price target for the company from 475p to 350p.

Self-storage company, Big Yellow Group, has acquired a new site in east London. The site is adjacent to one of their existing facilities, and the company plans to have a 125,000 square foot self-storage facility and 150 residential units across the two sites.

Wizz Air has endured major turbulence in recent months on account of the pandemic, but today it confirmed that its Abu Dhabi operation will commence on 1 October. The low fares airline has one of the most robust balance sheets in the sector. In the current environment, not many companies are expanding operations so Wizz and Big Yellow standout for the right reasons.          

US

Traders are a little bullish on the back of the Pfizer-BioNTech story. The health crisis is still a serious issue but for now, it is taking a backseat to the possibility that big pharma companies might be able to tackle the problem. The tech rally continues as the NASDAQ 100 is outperforming the S&P 500, and the tech-focused index is trading above 11,000 – a new record high.  

Florida has been one of the worst-hit states, and it has seen a 4.7% increase in the number of new cases, and while its seven day average is 4.4%. Traders will continue to monitor the situation.  

Maxim Integrated shares jumped as it will be taken over by Analog Devices. The deal is worth $20.91 billion and Analog shareholders will wind up with 69% of the new combined company, while Maxim shareholders will own the remainder of the entity. The move will create a chip-making business that will be worth roughly $68 billion and that should help it compete with the likes of Texas Instruments.   

PepsiCo confirmed that second quarter EPS were $1.32, topping the $1.25 forecast. Revenue in the three month period slipped by 3.1% to $15.95 billion, which was slightly ahead of forecasts.    

Tesla shares have hit yet another record high as its monster bull run continues.

FX

The US dollar has come under pressure as a risk-on sentiment has swept across the markets. In the past few months the greenback has been a popular safe haven play, so on days like today, the currency is unpopular. There were no major economic announcements from Europe or the US today so dealers had little to go on. EUR/USD has been helped by the slide in the US dollar. GBP/USD is a little lower despite the weakness in the greenback.

The rally in copper, it hit its highest level since April 2019, has assisted AUD/USD. The rise in the red metal suggests that demand is robust. Overnight, China will post its latest trade data and it seems that dealers are buying into the Australian dollar in advance of the report on hopes that the numbers will be positive.

Commodities

Gold is back above the $1,800 mark thanks to the softer US dollar. The inverse relationship between the two markets is still playing out. Historically, the metal has been a popular safe haven play, but seeing as the dollar is also attracting safe haven funds, that has disrupted the old relationship between risk attitude and gold. The metal is still in its bullish trend and while it holds above $1,800, the positive move should continue.

Brent crude and WTI are in the red today as there is talk the OPEC+ are considering rowing back on their production cuts. In April, the body announced a historic output cut as the perception was that demand was going to fall off of a cliff. A mixture of the deep output cuts and demand ticking up because economies are reopening has helped the oil price in recent months, so now there is chatter that Saudi Arabia is interested in undoing some of the tough production cuts.          

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