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Disney and 'Big Techs' Reacted Differently to Great Vaccine NewsDisney, McDonald's and 'Big Techs' Reacted Differently to Great Vaccine News On Monday, markets were woken from a nap by an unexpected welcome surprise. With one accord, and for a few hours, the trading community even seemed to have entirely forgotten all the threadbare media refrains concerning the U.S. election agenda. A set of major European indexes soared by five to seven percent, quickly starting to storm all of their respective multi-month top levels, with the French CAC40 exceeding the best summer quotes, and the U.S. broad market S&P500 index even hit its new record all-time highs. The reason for such agitation was the fresh and really breakthrough results of an anti-COVID vaccine. Headquartered in New York now and founded by German-Americans, a well-reputed pharmaceutical corporation called Pfizer, in cooperation with its close partner, a German bioengineering company BioNTech, declared their experimental COVID-19 vaccine was more than 90% effective on the third and final stage of trial results. There are still some questions to be answered surrounding the matter, such as, how long is immunity expected to last, but the base information was that Pfizer expects to seek U.S. emergency use authorisation for people aged 16 to 85 as soon as November. By the way, the skills of Pfizer Co were applied to the mass penicillin production during World War II in response to the need to treat injured Allied soldiers, and most of the penicillin that went ashore with the troops on D-Day was made by Pfizer. And now it seems that the company is going to save lives and economics against the harmful coronavirus. “I’m near ecstatic,” Bill Gruber, one of Pfizer’s top vaccine scientists, said in an interview. “This is a great day for public health and for the potential to get us all out of the circumstances we’re now in.” Peter Horby, professor of emerging infectious diseases at the University of Oxford, commented: “This news made me smile from ear to ear. It is a relief to see such positive results on this vaccine and bodes well for COVID-19 vaccines in general.” The scientists just need to wait for the finish of a follow-up safety data to assure no side effects crop up, and the necessary results are expected to be available in the third week of this month. Alex Azar, U.S. Health and Human Services Secretary, remarked it would take several weeks for U.S. regulators to receive and process the data before a potential approval. If it would be granted, companies estimate they can roll out up to 50 million doses before the end of 2020, enough to protect 25 million people with 2 necessary injections, and then their plan is to produce up to 1.3 billion doses in 2021. Ursula von der Leyen, the head of the EU Commission, happily tweeted: "European science works! @EU_Commission to sign contract with them soon for up to 300 million doses. Let's keep protecting each other in the meantime." By the way, the European Commission currently has three contracts for the purchase of other potential coronavirus vaccines with AstraZeneca, Johnson & Johnson and Sanofi-GSK. "A major breakthrough in the development of a coronavirus vaccine could deliver a vital boost of confidence to consumers and businesses", the Bank of England’s chief economist, Andy Haldane, said. "The economy may have reached a decisive moment," he added, as the vaccine could be a “game-changer”. He cautioned that, of course, it would take several months for the vaccine to be rolled out but that it would have an immediate effect on sentiment, as it would mean an end in sight to the "endless stop-start-cycle" of all business processes helping to unlock investments. This news and commentaries may not serve as instant coffee, which could immediately cheer up the entire world economy, at least because the subsequent approval of the vaccine does not mean that the vaccine will be distributed to everyone who wants it in a week or even a month. But the new situation has already brought visible relief to the markets, although most of the various assets and composite indices failed to hold their initial gains of Monday evening. The S&P 500 index closed yesterday near the 3,550 point level, where it was also located by European midday on Tuesday. This is about 120 points below Monday's peak, and the index price was approximately 35 points lower at some moments in Asian trading. It seemed as if some share prices jumped for joy, like those of the Walt Disney Company, which rose more than 12% just after the opening bell. Walt Disney even traded above $147.50 for a short moment, which was just a little bit above the quotes of the beginning of February. Prices beyond $150 were last seen in December 2019, at non-pandemic times, and Disney never traded higher than that before. The House of Mouse' shares have been generally within a range between $115 to $130 since July, amid the unnatural but "new normal" social-distance obstacles that accompany the reopening of theme parks, which amounted to a third of all the cartoon empire's profit in previous years. Disney-themed cruises and hotels were also thriving on shared group experiences and suffering a lot after the forced closure of the resorts. A long pause in the running of worldwide movie theatres also influenced the revenue. Disney shares were already doing much better even before the news about the vaccine, but now they were seen to be flying up with a kind of crazy enthusiasm, and the following price correction reached only a local intraday bottom in the $138 area, and the next move was above $142.50 again. Walt Disney is going to report its earnings for the fiscal 2020 fourth quarter, meaning the financial results of Q3, after Wall Street will close on Thursday, November 12. Analysts in numerous polls are expecting about $14 billion in Q3 sales on average and $0.73 loss per share. A bright spot in the upcoming earnings could be the number of subscribers on Disney's streaming service, Disney+, which may continue to benefit from the stay-at-home environment. But perhaps the most important thing to look at going forward is how investors will react to prospects that will arise after the pandemic is over. . Some other shares behaved in a more controversial manner after the perspective of their financial report changed after the news of the vaccine yesterday. . For example, the movements of McDonald's share price were very emotional and rather surprising if compared with the last financial report just published before Wall Street’s Monday's trading session. The reported profit, in a form of equity per share (EPS), was $2.22, a historical record for McDonald's and much above the average expectations of just $1.91 per share. The company’s highest EPS was at $2.32 in 2017 and its highest quarter revenue for this year stands at $5.42 billion. So, the shares' price started to trade with a large gap of $227 per share, but a mass profit taking process immediately loomed , so the price quickly fell by more than $10 lower and then even continued to dive, hitting a twelve-week low at $208.30. Then the situation on charts became more stable around the closing price of $213.22. The fast food giant's massive network of drive-through locations helped to revive sales during the pandemic and on delivery apps orders when customers tried to avoid dining out during the pandemic. Now a positive effect of possible normalisation of life may play a role but rivals from the traditional restaurant segment will not fall asleep too. McDonald's CEOs said on Monday, they would test a "MyMcDonald's" digital loyalty program for customers to allow those who sign up to get tailored offers. Network restaurants are also planned to launch a new crispy chicken sandwich next year as it refocuses its long-term strategy after the pandemic. The world's largest burger chain plans next year to prioritise marketing, including new packaging globally with a "modern, refreshing feel and playful touches to unify branding in markets all over the world," it said in a statement. In terms of financial figures, McDonald's repeated its own achievement in revenue for autumn 2019, which was already high. So, it reached its normal revenue level, since the fast food network showed approximately the same figures in three quarters out of four last year. The revenue figures now turned out to be the highest for any quarter in the previous three years, but throughout 2016 and 2017, McDonald’s revenue figures were exceeded $6 billion in some quarters. Earnings per share were then lower; it ranged from $1.23 to $1.99 per share. That means sales structures have become more efficient since then. Such indication may allow forecasting a gradual movement to some higher targets for share prices in the next 12 months, provided that everything gets better with the COVID-19 situation. At the same time, further price movements of all index futures prices deleted most of yesterday's gains. Many "big techs" even lost some part of their giant capitalisation over the course of Monday's trade, including Amazon (-5.06%) or the so-called "stay-at-home" shares like Netflix (-8.59%). The market may doubt if they were overestimated to some extent under the condition that the vaccine may push the general public to more offline-activity after several months. Against this background, The Nasdaq 100 high tech index continues to lose its value, while the S&P dynamics are mixed today. Hopeful about a better future, many investors seem to be gradually returning to the realities of this transient world, where many countries still have partial lockdowns and viral cases, and there would probably be the lasting tension around the U.S. presidential seat. Donald Trump is showing no signs that he will engage in any power transition. Moreover, the sitting U.S. President unexpectedly replaced the head of the Pentagon. He tweeted that Christopher Miller, Director of the National Counterterrorism Centre, unanimously confirmed by the Senate at that position before, will be acting as Secretary of Defence. That information created a small turmoil in the market before the end of Monday's trade, as it may indicate Mr Trump's determination to strengthen the security forces for the case of street riots, for example, while his claims on alleged fraud with votes are considered by the court, and he announced that he has already formed the teams to pursue recounts in several states.
NYSE:DIS
by Frederico_FXAnalyst
Which Companies May Win More from the U.S. Election GridlockThe only manifested gainers from a lasting uncertainty surrounding the final U.S. election results seems to be, for now, some European, Asian and other non-American stocks. For example, the German Xetra DAX 30, as well as the French CAC 40 and pan-European Euro Stoxx 50 indexes are climbing higher for the fifth straight trading day in a row. China’s Shanghai Composite (SSEC) also added around 3% compared to last Friday's closing price. The Shenzhen Component rose 1.72%, and Hong Kong’s Hang Seng Index soared 3.25% today. Even in Australia, the broad S&P/ASX 200 index gained 1.28% today and around 3.5% since the beginning of the week. As investors await to see who will be recognised as the legitimate political leader of the United States after a series of lawsuits claimed by the juridical team of the incumbent President Donald Trump, the U.S. S&P500 and high-tech Nasdaq indices are also in overdrive, going up on the path of least resistance, maybe because the stock markets are used to growing year by year under both Republican or Democratic administrations inside the White House. So, it is not a big surprise that after the previous technical correction large amounts of the financial flows were redirected outside the United States in this suspended situation. At the same time, it may be argued that if formally leading Biden wins the election, then a corporate tax increase promised by him may temporarily play against the market and negatively compensate for the yet-to-be-adopted stimulus package, which may add to rival attractiveness of assets from Europe or Asia. In case that Trump succeeds in court, the U.S. market could get an additional burst that may continue a four-year long "Trump-rally" by inertia, which also could quickly help other markets. Perhaps for these reasons, Europe and China are now getting a fair slice of the investment pie. For example, Hong Kong stocks of Alibaba jumped 5.7% for the next 24 hours after Election Day, even though Chinese regulators halted the Shanghai and Hong Kong arms of Ant Group’s IPO, an affiliate FinTech unicorn company of Alibaba Group, which was expected to become the world’s biggest IPO listing. Of course, Chinese companies are partly hoping for tariff relief on the American market in case of Joe Biden's arrival to the White House. A situation with a rather weak next President may not be considered so bad for Chinese manufacturers and IT-companies, as any next U.S. President could be tied in his decisions after the nation was so divided politically. Meanwhile, the Democrat candidate Joe Biden claimed victory in the states of Wisconsin and Michigan earlier in the day, which inches him closer to the White House. However, the decisive battle of 2020 has not yet been lost by Mr Trump. So, it seems that he has a real chance of successfully challenging the alleged oddities with the ballots in the courts: as in Michigan when all of a sudden 128,000 votes for Biden appeared after one of the official counting updates, but for the same short period there were not even a single vote for Trump. This could be considered a clear reason to request the re-counting of all votes in this state. There was also a strange situation in Pennsylvania where Trump was leading 56% vs 42.5% by half a million voices before the very end of counting all in-person votes. Trump’s advantage in this situation may be seen as too large to overcome with mail-in ballots. However, the margin narrowed by European midday today to just 2.6%, but still in favour of Trump, and so far the sitting President also has a chance in Nevada, where 25% of the ballots have not yet been counted, and the difference is only 8,000 votes in favour of Biden. The gap in the key Wisconsin state is also only 20,000 votes, so the Trump team demanded a recount there. It may take a couple of weeks to figure out all these nuances. As for the U.S. market, mainly those companies whose position are doubted are growing in price. For a long time these have been big techs, with Google, Amazon and Apple as bright representatives, and retail chains or food and drink companies, which do not require their consumer to spend a lot of money. It's hard to expect that profits of companies like Coca-Cola or Walmart, Starbucks or McDonalds would critically depend on who is the President of the United States or even on the pandemic. The last thing that people of large cities and small towns of the world may save on, even in a tight economic situation, is a fast-food breakfast or a subscription to a channel with fairy tales and cartoons for their children like Disney. That's probably why shares of all the companies listed above added between one and two percent yesterday, and some of these companies have even grown more since the beginning of the week. For example, a battery car maker Tesla or shale oil companies and banks are potentially more dependable on the election results. In Germany, especially in the retail sector (+1.75% until noon), pharmaceuticals and healthcare sectors (+0.75%) plus financial services (+0.95% for the first two trading hours) led shares higher today. The technology sector (TecDAX index) climbed almost 2%, in addition to 2.49% on Wednesday's close. As for the French market, it would be worth a separate mention that CAC 40 futures price is already approaching its peak levels of mid-October despite more than 10% losses in price at the very end of the month which were caused by natural worries, as it all came after the rather strict orders by Palais de l'Elysee for the partial quarantine measures throughout the country. ArcelorMittal is also in European focus after the Luxembourg-headquartered company, which produces around 5% of the world's steel, beat the average Q3 2020 expectations for its financial results. After the spring lockdown lows, the steelmaker said its core profit fell 15% from a year earlier to $901 million, compared with an average forecast of $838 million in a company-compiled poll. CEO Lakshmi Mittal remarked that steel markets had recovered from "a very challenging second quarter", with particular improvements in profits in Brazil and its unit grouping South Africa, Kazakhstan and Ukraine.
TVC:SPX
by Frederico_FXAnalyst
US Elections Made Crowds Turn a Blind Eye on Brilliant ReportsU.S. Elections Made Crowds Turn a Blind Eye on Brilliant Corporate Reports It seems that stock markets and currencies, as well as commodities, are no longer willing to respond appropriately to the regular macroeconomic background or even to the important Q3 corporate reports from giant companies. The investment community itself seems to not care about forming any mental conception or any expectations concerning the outcome of the Bank of England’s meeting or the U.S. Federal Reserve’s meeting this Thursday. An extreme uncertainty surrounding the foggy U.S. election process is driving investors to be cautious, so that nobody is eager to load their investment stomachs too much with additional food of shares and other market assets that may be difficult to digest during what is to come during the next couple of weeks. It is easier and healthy to keep things as they are until the visionary revelation from Washington may descend on the market community. There is even less economic fundamental clarity because of limited lockdowns in France, Germany, and now in the U.K. too. Large businesses continue to operate almost as usual, but the service sector and the general public are still nervous about the prospects surrounding their regular income, which may lead to limited demand, so "all that jazz" does not create grounds for optimism right at the moment. Amazon, the world's largest online retailer, beat its own all-time earnings record with $12.37 per share for the Q3 2020 on Thursday, against $7.41 of average forecasts only by expert polls in Bloomberg. And it was done on a record revenue of $96.15 bln. Amazon CEOs foresee for Q4 2020 that the company will have much better net sales, in a range between $112 bln and $121 bln, which is definitely higher than all previous estimations of most market experts and of the IT-giant itself. Yet, the market crowd preferred to save this juicy bonne bouche for later, by selling Amazon shares immediately above $3200 even before the report was released and then by selling Amazon again above $3150 just from the very start of Friday's pre-market trade to kick the prices quickly down to the $3030 area before the end of the week. Exactly the same story happened with Apple shares, despite better-than-expected Q3 2020 revenue, which exceeded each of the results for Q1 or Q2 2020 and even Q3 2019. Nevertheless, that didn't help Apple shares to hold at least a $110 landmark, so the Apple Co stock prices finished the previous week at $108.86. It is unlikely that lower sales of the iPhones may serve as a convincing excuse for such a decline in Apple shares after $125 per share in mid-October, since it has been clear for some time that consumers would not want to buy too many old-model iPhones in Q3, expecting the future opportunity to get the new iPhone 12 series with 5G technology decisions in Q4. Most of the funds and private investors are simply trying to postpone the purchase of any new shares, especially of expensive "big techs", until after the end of the U.S. presidential election. But for now, on the contrary, they are taking some profits each time they catch some better prices to fix profit, fearing some lower dips on the charts. All eyes are now on America. What's going to happen there? As Joe Biden, the Democratic contender for the hot U.S. presidential seat, just focuses on rallies in two swing states of Pennsylvania and Ohio during the last day of campaigning on Monday, the incumbent U.S. President Donald Trump is trying to clear the hurdle at the final curve with a speed that is almost beyond normal human ability by holding as many as five rallies today to encourage his potential supporters in North Carolina, Pennsylvania, Wisconsin plus two in Michigan. That's after staging five more rallies a day on Sunday, when he already inflamed the crowds in the same Michigan and North Carolina, plus Iowa, Georgia and Florida. The inexhaustible Mr Trump is going to close out the two-day intense trip late night in Grand Rapids, Michigan, exactly the same location where he finished his campaign in 2016, when he took Michigan, Pennsylvania and Wisconsin, which were three Democratic states for decades. Perhaps, he just believes in omens and hopes to repeat, in some way, his success of four years ago. However, it would be very difficult for him to repeat such a heroic deed once again, since the gap even in those battleground states is allegedly several percent in favour of Mr Biden, at least according to all official polls. Each of Mr Trump's stage rallies created a more visually effective picture with dancing and emotionally chanting crowds than rather slumberous meetings of Mr Biden with an audience usually consisting of hundreds of people inside their klaxoning vehicles, because more people are following COVID-19 restrictions during Democratic events. Anyway, Donald Trump warned again that the outcome of the election might not be known on Tuesday night, due to the counting of mail-in votes in tossup states. "I think it's highly like you’re not going to have a decision because Pennsylvania is very big," Trump said, for example, in Newtown just two days ago. He makes similar statements at all his rallies, so Mr Trump is clearly not going to admit defeat in any cut of cards on Wednesday morning. Reuters wrote that a record 90 million Americans have voted early in the election, data of the weekend showed. The high number of early voters, about 65% of the total turnout in 2016 already, reflects the coronavirus worries. But mail-in votes counting nationwide may last longer than anybody could expect, and more than that, the results in tossup states may be challenged in courts of any state or even finally in the Supreme Court. Disclaimer: Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.
TVC:SPX
by Frederico_FXAnalyst