FTSE 100 falters despite vaccine news, BofE top economist says recovery has been V-shaped
Despite the promising results from the University of Oxford vaccine trial, the FTSE 100 still sank on Monday, closing the day 0.5% lower. Stock wise, a mixture of names dragged the FTSE 100 lower. International Consolidated Airlines Group, British American Tobacco and Burberry Group all fell by more than 2%. Investors also had insight from Bank of England chief economist Andy Haldane to digest, after the policymaker told MPs that there has been a V-shaped bounceback in the UK economy. He told the Treasury Select Committee that around half of the 25% fall in economic activity between March and April has been won back since, with the economy growing by around 1% a week. “We have seen a bounceback. So far, it has been a V – that of course doesn’t tell us where we might go next,” he said. In other headlines, Royal Bank of Scotland – one of the UK’s largest employers – told its 50,000 staff that they would not be returning to the office until 2021, putting a dent in Prime Minister Boris Johnson’s hope to get workers back into offices faster to boost the economy.
- FTSE 100: -0.5% Monday, -17% YTD
- FTSE 250: 0.2% Monday, -20.6% YTD
What to watch
Novartis: Swiss pharmaceutical giant Novartis is dual-listed in Zurich and New York. The firm reports its second quarter earnings on Tuesday morning New York time, following a year that has seen the share price of its US listing slip by 7.1%. Novartis is involved in a variety of Covid-19 projects, including treatments and vaccines, but its CEO warned back in May that it may take until the end of 2021 for a vaccine to become available. That prediction is likely to be front and center of the firm’s earnings call. Currently, 14 Wall Street analysts rate the stock as a buy or overweight, six as a hold and two as a sell.
Coca-Cola Company: Following key rival PepsiCo’s earnings report last week, which was met with a tepid response from investors (Pepsi stock was down 1.3% last week), Coca-Cola will deliver its own Q2 update on Tuesday. Similar to Pepsi, the closure of restaurants and bars that sell its products will likely have hurt Coca-Cola during the quarter, and investors will be watching for any uptick in sales of drinks to consumers stuck at home. Coca-Cola’s business is highly global, and its results will not just be determined by the state of play lockdown wise in the US. Analysts at Morningstar noted that Coca-Cola management has already dampened expectations for Q2. The firm’s share price is down 16.7% year-to-date, and multiple analysts have shifted to a buy rating on the stock over the past three months.
United Airlines: While the broader market rallied on Monday, driven by Covid-19 vaccine hopes, that was not enough to boost United stock. The firm’s share price fell 4.7% and is now down 63.3% year-to-date – although it is 16.3% higher than it was three months ago. United has already warned staff that it may lay off close to half of its workforce once it is free of the restrictions that came attached to a federal bailout of the airline industry. The airline reports earnings after the market close on Tuesday, where analysts will be probing for any recent demand pickup the firm has seen, measures to control costs, and how capable it is of weathering another period of widespread lockdowns in the US. Analysts are anticipating a loss of $8.96 per share, around triple the loss posted in Q1. Price targets on the stock range from $25 to $61, with an average of $41.38, versus its $32.33 Monday close.
Other significant US-listed stocks reporting on Tuesday: Texas Instruments, Philip Morris, Lockheed Martin, Intuitive Surgical, Prologis, Snap, Capital One Financial, Paccar, Interactive Brokers, Synchrony Financial
Crypto corner: Mastercard partners with crypto firms for card programme
Mastercard is making access to its payments technology easier for firms in the cryptoasset space. It announced yesterday that requirements to its Accelerate programme are now more simple, so that partners can onboard within a matter of weeks.
Crypto companies who choose to onboard with Mastercard will now be given extra support by the payments giant to enter into the market, as well as benefiting from their cybersecurity expertise and market research, according to reports from CoinTelegraph.
Digital payments platform Wirex has become Mastercard’s first native crypto principal member, allowing it to issue crypto payments cards.
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