Vaccine Hopes Control Wall Street
- US markets have bounced back almost all the way for the year: S&P 500 is flat, Dow Jones is down about 6% and the Nasdaq 100 is up nearly 18%.
- Markets reacted positively this week to reports surrounding promising results of Moderna’s coronavirus vaccine.
- The influence was felt in markets sectors most impacted by the global shutdown, as cruise line stocks soared on the news, only to decline later on a cruise ban announced by the CDC in the US.
Big Banks Kick off Earnings Season
- The earnings season started with an overall positive tone when big banks announced their reports throughout last week.
- With the exclusion of Well Fargo, US banks, including Goldman Sachs, Morgan Stanley, Citigroup and JP Morgan, have beaten expectations on both revenues and earnings, thanks to strong investment banking and asset management revenues.
- As the season continues, companies are expected to report much less business than they did 12 months ago. How much less will vary massively. It is likely that big tech won’t report anywhere near as much of a downturn as brick and mortar businesses.
Oil Holding Around $40
- According to Reuters, OPEC fears its record oil cuts will fail to rebalance the market in case of a second wave of the COVID-19.
- OPEC and Russia said they would ease record oil curbs from August 1st, citing a gradual recovery in demand. OPEC+ expects oil demand to climb by 7 million barrels-per-day (BPD) in 2021 after falling 9 million BPD this year.
- From a technical perspective, oil has struggled to get convincingly past $40 for some time now. While demand has picked up, it is still nowhere near pre-pandemic levels and won’t be until at least next year.
Bitcoin Stagnant: Is Alt Season Here?
- Lately, it seems that more money being held in stablecoins, creating a higher potential for a large inflow of capital into Bitcoin on short notice.
- Currently for every dollar in BTC there are 6.5 cents in stablecoins. This is comparatively high relative to early 2018, when there were only 1.1 cents in stablecoins for every dollar in BTC.
- The lack of movement in BTC, whilst Alts have been volatile, has prompted some analysts to suggest we are in ‘alt season’.
ECB Holds Rates Steady
- Christine Lagarde didn’t make any major announcement and passed the ball to the European Council last Thursday, asking for financial support.
- The European economy is benefiting from a rebound in leading indicators, like PMI, and lower interest rates. However, there is still just a vague idea about the fiscal relief program.
The Week Ahead
- Microsoft and Tesla report earnings (Wednesday).
- Flash Manufacturing and Service PMI reports from the US and Europe (Friday).
Written by a team of experienced financial analysts at eToro.
This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results.