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Daily Market Update

Latest Economic & Market Update 15th September 2020

Good afternoon, it is September 15th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • US equities up on back of vaccine developments and TikTok movement
  • EU equities muted over worries over No-Deal Brexit
  • Proportion of studied companies in repayment shortfall second to only post dot com bubble levels

Following promising vaccine developments and M&A activity over the weekend, US equities performed strongly on Monday. The S&P 500 touched a week high before paring gains, while the Nasdaq 100 Index broke a two-day slide. President Trump’s preferred candidate Oracle took a significant step in completing its partnership with TikTok. Oracle confirmed that the video-sharing platform submitted a proposal to the US Treasury naming Oracle as a “trusted technology provider”. The S&P was up 1.3% and the NASDAQ 2%. (Source: Bloomberg)

European equities were muted due to the resurfaced likelihood of a No-Deal Brexit. Stoxx Europe 600 rose just 0.15% while FTSE 100 was down 0.10%. (Source: Bloomberg) Boris Johnson’s bill to override sections of the previously agreed withdrawal agreement with the EU passed its first stage in Parliament yesterday. However, the “UK Internal Market Bill” faces further scrutiny from senior Conservative party members who aim to vote on an amendment that will allow MPs power to block Johnson’s proposed changes. Sterling remains in the €1.08 region.

Following 2020’s drastic reduction in borrowing costs by central banks globally to support countries and economies in lockdown, there is an increasing number of “Zombie Companies” in operation according to The Leuthold Group. At the beginning of the month, the record for most debt raised in the US bond market in a calendar year was broken. Leuthold 3000 Universe index (similar to Russell 3000 index of US companies) now has 15% of companies with at least three years of a repayments shortfall. Only after the dot com bubble in September 2000 has the level been above this 15% mark. This highlights a potential sensitivity in the bond market should any of these corporations be unable to refinance or repay debt. (Source: FT)

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

Global Market Update
(as at close of markets 14/09/2020)