US Stimulus Hopes Lift Mood, Oil Pops

US Stimulus Hopes Lift Mood, Oil Pops

CMC Markets  | Oct 09, 2020 05:50

Equity markets are showing decent gains on renewed hopes of a stimulus package in the US.

Europe

President Trump claimed that Congress has restarted talks in relation to a coronavirus relief package, but no further details were given. The back and forth in relation to the stimulus programme has been the main story of the last few sessions. Earlier in the week, the Donald declared that the discussions were brought to an end, and that there would be no stimulus scheme until after the election, but now there has been a U-turn, and it would not be the first time that the US leader changed his mind in a short period of time. Traders’ reacted well to the news, especially seeing as European markets underperformed against their US equivalents yesterday.

GVC (LON:GVC) shares hit their highest level in over two years on the back of the bullish third quarter update. Group net gaming revenue increased by 12%, and the online gaming unit outperformed as the revenue jumped by 26%. The online gaming revenue is now at levels above that before the pandemic struck – some of GVC’s competitors also experienced a jump in online gaming activity. GVC announced that full year EBITDA will be in the region of £770-£790 million, which would be above forecasts. In the current environment only a minority of groups are issuing optimistic outlooks, and that caught traders’ attention.

EasyJet (LON:EZJ) announced that full year passengers fell by 50% to 48 million. The low-cost carrier predicts that the annual loss will be between £815 million and £845 million. Renewed health fears and tougher travel restrictions have hurt the airline and the outlook remains weak, as it plans to operate at 25% of capacity in the first quarter. Even though the environment is challenging easyJet (LON:EZJ) is in a strong position to endure the tough times ahead as it’s cash balance is £2.3 billion.

Hargreaves Lansdown (LON:HRGV) shares are in the red even though the company had a respectable first quarter. Revenue was £128.1 million, up 12%. Net new business was £800 million. A surge in volatility in the financial markets on account of the pandemic helped the business. In the three month period, assets under management increased by 3% to £106.9 billion.

Imperial Brands (LON:IMB) said that full year net revenue is expected to be flat on the year, which is a better-than-expected guidance. The group had a relatively strong performance in regard to tobacco products in Europe and the US, so that helped offset the weaker sales at popular holiday destinations. The next generating products unit is expected to post a 30% fall in revenue.

Toscafund Asset Management has approached TalkTalk (OTC:TKTCY) with a takeover offer, and the telecoms group confirmed they are exploring the proposal. The news sent TalkTalk shares to their highest in four months.

Rolls-Royce (LON:RR) shares are on a roll as the stock is up 23%. Last Friday, the stock tumbled to a 17-year low, and since then it has rebounded over 85%. The engineering titan plans to raise funds from a rights issue and through debt in an effort to bolster its balance sheet. It seems that traders feel the capital raising plans should stop the rot in terms of the company’s financial image.

US

The S&P 500 is building on yesterday’s gains as the comments from President Trump in relation to the possibility of a stimulus package. Mr Trump said that he plans to target China with tariffs, and it seems that will be his strategy going into the election. Only a few days ago it appeared he was going to use the lure of relief package to try and win over voters, but he has turned his attention back to China, which he will probably use as the bogeyman.

The initial jobless claims reading was 840,000, which was slightly higher than the 820,000 that economists were expecting. The previous reading was revised from 837,000 to 849,000. The continued claims reading fell from 11.76 million to 10.97 million, but keep in mind the report is one week behind the jobless reading. The labour market is clearly in a dire state, but things are slowly improving.

Domino’s Pizza inc (NYSE:DPZ) delivered third quarter EPS of $2.49 but equity analysts were expecting $2.79. US same stores sales jumped by 17.5%m and that topped the 13.9% forecast.

FX

There has been little movement in GBP/USD and EUR/USD as there has been an absence of any major news to influence the currencies. The dollar is a touch higher in the wake of the negative move that was witnessed yesterday. Lately the greenback has been sensitive to any big changes in the attitude to risk and seeing as US equities haven’t moved a whole lot today, and that appears to be affecting the dollar.

Commodities

Gold is basically flat on the session. In the past few months, the asset has been dragged around by the greenback. There has been a strong inverse relationship between the two markets and seeing as the dollar has traded in a small range today, it is a similar story with gold.

WTI and Brent crude are up as a category 3 hurricane is due to descend upon the Gulf of Mexico and oil companies have been removing workers from their operations in the area. The hurricane story has been in the news for a few days. The overall feel-good factor in relation to the optimism about a stimulus package in the US is helping too.

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

Original Post

CMC Markets

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Adam Gentry
Adam Gentry

Stimulus aint coming until after the election so who are you kidding. December announcement at best, January, February at worst  ... (Read More)

Oct 09, 2020 09:14 GMT· Reply
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+

Download the Investing.com App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.

Investing.com is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.