Yesterday’s 3% rally in the S&P did not spill into the European markets and instead the FTSE started the day firmly in the red. The ever-so-slight easing of the lock downs in Europe where Denmark reopened schools and Austria reopened smaller shops ,was not enough to balance out other corona news including a jump in the number of new cases in France and no signs of an easing of the lock down in the UK.
The start of the earnings season in the US didn’t bring much good news for investors as JP Morgan warned that the defaults in the loan market could become significantly worse in the weeks to come. The bank reported earnings which were roughly 50% lower than analysts had expected, signalling that the US banking sector might end up carrying a much heavier burden than initially estimated.
On the London investors’ “hit list” this morning are easyJet and asset manager Intermediate Capital Group, both down close to 7%. The latter started plunging late last week as speculation about potential redemptions and the solidity of the company’s investments intensified but this morning a note from JP Morgan said that the selloff might have been overdone and pegged the target price at 1400, significantly above the current trade of 950.
Balancing out the FTSE scales are delivery firms, supermarkets and pharma firms, all of which are still attracting solid interest from investors.
Crude oil below $30 again
Last week’s happy hour in the oil market when prices jumped up to $35 ahead of an emergency OPEC meeting has come to an abrupt end and Brent crude is now back below the $30 mark. The expectation that an OPEC cut would solve all of the oil traders' woes proved far too unrealistic and the agreed cut, though substantial, has not been enough to really counter the excess of oil in the market caused by the pandemic.