Weekly Market Insight

Latest Economic & Market Update 14th September 2020

14th September 2020

Good afternoon, it is September 14th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • US equity futures edge higher following M&A activity and vaccine progress on both sides of the Atlantic
  • Oil weakens due to future growth concerns
  • SoftBank considers going private

Following two consecutive weeks of global stock market declines, S&P 500 and Nasdaq 100 Index futures were up c.1% on Monday due to positive developments in the quest for a Covid-19 vaccine. In the UK, AstraZeneca plc and University of Oxford have resumed their UK drug trials following a temporary halt last week after a participant felt ill. In the US, Immunomedics Inc shares more than doubled in pre-market trading, following Sunday’s announcement that Gilead Sciences are to acquire the drugmaker. Pfizer Inc CEO Albert Bourla told CBS News that they should know by the end of October if the company’s experimental Covid-19 vaccine works. If approved, he believes it could be ready for US distribution by year-end 2020. Source: Bloomberg

UK energy giant BP has warned the demand for oil will weaken in the coming years. The Covid-19 pandemic has shown an earlier-than-anticipated decline in the use of fossil fuels as we move toward cleaner fuels. The reduction in forecast is a dramatic change from last year when BPā€™s predictions showed increased consumption over the next 30 years. Government lockdowns and travel bans have accounted for a 10% drop in oil demand this year. While oil demand is not expected to collapse, a plateau in consumption would change the industry outlook and the willingness of investors to fund new projects. Increasing electrification and efficiency of transportation are the main drivers of the reduction in demand, as well as increased pressure from environmentalists on companies to tackle climate change

Executives at a Japanese tech group Softbank have revived discussions about going private following a series of big asset disposals. The discussions are driven by frustrations over the persistent discount in Softbank’s $115bn equity valuation compared with the value of its individual holdings, which has endured, even after an asset sale programme targetted closing that gap. The latest, a $40bn sale of Arm Holdings to US chipmaker Nvidia, will make SoftBank the largest shareholder in Nvidia, and could upend the chip industry.

The dollar opened weaker relative to the euro and GBP. At the time of writing (12pm Monday) the euro is trading at $1.187 while the pound sterling trades at $1.287

Key Events forthcoming this week:

  • China industrial production and retail sales data: Tuesday
  • FOMC policy decision: Wednesday
  • BoJ, Bank Indonesia and BoE policy decisions: Thursday
  • Expiry of futures and options on both equities and indexes: Friday

Best & Worst Performers of Large Cap US Stocks on Friday
Click image to enlarge

Global Market Update
(as at close of markets 11/09/2020)