Mask wearing and corporate earnings entice investors to add risk as FTSE rises 1.3%On July 13, 2020 by Thomas Belayneh
Donald Trump and Boris Johnson donned face masks in public for the first time since the pandemic began over the weekend, as Downing Street is expected to make an announcement over the next few days regarding whether it should be mandatory to wear masks in shops.
If the UK government were to enact such a policy, this may slow the spread and keep the incidence of new Coronavirus cases low, allowing for a sustained relaxation of restrictions thereby potentially supporting an economy recovery.
News is also expected later in the week regarding the outcome of discussions over the European Commission’s €750bn recovery fund with Dutch PM, Mark Rutte, one of four leaders of the so-called “frugal four” countries, arguing that grants should be replaced with loans and have conditions on economic reform attached.
Seemingly ignoring a record 15,300 rise in Coronavirus cases in Florida on Sunday, the FTSE 100 rose 1.33% to 6,176.19 today as investors were optimistic ahead of corporate earnings announcements from several large US firms.
Across Europe, the CAC 40, DAX, FTSE MIB and IBEX 35 equity indices all ended the day higher today, rising 1.72%, 1.31%, 1.19% and 1.44%, respectively.
The US dollar continued to weaken today, as risk-on sentiment prevailed, causing silver to rise by almost 3% to 19.2628$/Oz.
Fresnillo, the world’s largest primary silver producer, thus followed silver’s strong performance today ending the day 5.62% higher at 992.8p and was the biggest riser on the FTSE 100.
Taylor Wimpey, although the worst performer on the FTSE 100, fell by only 0.9% to 143.7p, as investor enthusiasm for UK developers cooled following bumper gains last week after UK chancellor, Rishi Sunak, announced a stamp-duty holiday and fellow UK developer, Persimmon, reported strong results.
US Corporate Earnings
PepsiCo kicked off this week’s announcements with Q2 Adjusted EPS at $1.32 vs $1.25 estimated. While revenue fell 3.1% year-on-year to $15.95bn, this was still ahead of the consensus estimate for $15.37bn in sales.
Super Tuesday sees J.P. Morgan, Wells Fargo and Citigroup take to the stage with their Q2 trading updates. Loan-loss provisions will be a key focus point for investors, which, by proxy, will give us a glimpse of the financial health of businesses and consumers, as well as of course the outlook for provisions over the next few quarters.
All else equal, increases in loan-loss provisions reduces net income/EPS.
This site uses Akismet to reduce spam. Learn how your comment data is processed.