Weekly Analyst Update — June 1st

Sofie Hendrick
Jun 2 · 3 min read
Delta has partnered with eToro to allow users to invest via an accredited and bespoke platform.

Wall Street Closes Higher for May

  • US markets showed strong performance in May, with gains of around 7% for both the DJ30 and SPX500, while the NSDQ100 finished with double-digit gains for the month and more than 5% for the year.
  • The SPX has recovered more than 35% from its March lows — the largest recovery in History.
  • 85% of Russell 2000 stocks (IWM ETF) and 90% of SPX500 stocks are above their 50-day moving averages — a very bullish signal.

EU Coronavirus Stimulus

  • EU leaders are working on a $1 trillion recovery fund, which is approximately 7% of EU GDP (14 trillion). The US stimulus package is around 10% of US GDP ($20 trillion).
  • Italy would get a sum of around $81.8 billion and Spain would get $77.3 billion. The package also includes direct loans.

Will Bitcoin Finally Breach $10K?

  • After testing $8,700 at the start of last week the $10K level is now in sight again.
  • There are a few scenarios if BTC reaches $10,000 again: Prices may break through and hold above the mark, or there may be another selloff.
  • Since last Month’s halving event, several miners have closed down operations, a fact which would lead to more centralization in the Bitcoin space.
Delta has partnered with eToro to allow users to invest via an accredited and bespoke platform.

US-China Tensions Escalate

  • Last week the US Senate passed a bill that could restrict certain Chinese companies from listing on US exchanges, unless they comply with regulatory standards. However, it should not involve the biggest US-listed Chinese companies for the time being.
  • At the same time, price action on main indices shows almost no fears of an imminent escalation of the conflict.

Travel Sector Recovery

  • Spending on transportation is picking up. In the US the number of travellers in April declined to just 87,534, 96% lower compared to the same period last year.
  • However, by May 22nd, the figure had more than tripled to 348,673, although still down 88% from last year.
  • Air France rebounded 20% last week, recovering from lows not seen since 2009. The airline will resume its flights to and from Italy today, which make up more than 15% of the group’s flights. The 7 billion Euro aid given by the French government also helped the company maintain stability.
  • The German government will take a 20% stake in Lufthansa, which is almost 9 billion Euro. The company will also benefit from a three-year, state-guaranteed loan of three billion euros from German public bank KfW.

The Week Ahead

  • Earnings season coming to an end: Q1 average EPS is down about 14%, vs. -25% EPS expected.
  • NFP report this Friday: There were more than 40 million initial jobless claims over the past 10 weeks. However, there has been a week-over-week decline for 8 weeks in a row

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.

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