Morning Market Wrap: Equity rally pauses, bitcoin slumps, ASX to open lower

27 Nov 2020
European equities were lower on Thursday along with US futures with cash markets closed for the Thanksgiving holiday.

European shares traded modestly lower on Thursday as cyclical shares underperformed while technology and healthcare rose. The Euro Stoxx 600 was little changed, down just -0.12% having risen +14.5% month-to-date, with healthcare and information technology rising +0.76% and +0.73% respectively while energy and financials fell -1.41% and -0.56%. The DAX30 was little changed at -0.02%, as was the CAC40 -0.08% and the FTSE100 declined -0.44%. Futures tracking the S&P500 declined -0.26% while Nasdaq100 futures were flat, up just +0.01%.

The Euro edged modestly lower against the U.S. dollar after German and French consumer confidence survey’s missed expectations as lockdowns hit sentiment. German consumer confidence measure fell to -6.7 against estimates of -5, with worries around income rising. Similarly, French consumer confidence also declined more than anticipated to 90 vs 92 expected on worries around personal financial situations. Yields on German and French 10-year government bonds weakened -2 and -1.8 basis points respectively.

Bitcoin continues to grab headlines, sliding 10% after rising to within a whisper of it’s all-time high from December 2017. The falls seemed to be in response to fears over tighter regulation with Coinbase. Inc’s CEO Brian Armstrong tweeting about concerns the Trump administration may rush out rules to track owners of self-hosted wallets. The price had surged +77% since the end of September, given the strength of the rally which has almost been parabolic, it is unsurprising to see a correction.


*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.

Local shares are set to open lower on Friday with ASX200 futures down -0.26% at 6,626. The ASX200 closed -0.70% lower on Thursday at 6,636.4 led by declines in financials -1.42% and industrials -1.13% while technology and utilities outperformed +0.97% and +1.22% respectively. TechnologyOne was the top performing stock, jumping +5.64% having released full-year results earlier in the week, including consideration of a special dividend. Harvey Norman was the second best stock up +5.46% after several brokers raised their target prices following a positive trading update on Wednesday with sales revenue rising +28% financial year-to-date and net profit after tax up +160%. Virgin Money UK shares sank -11.54% after the bank set aside more money for bad loans than anticipated with pre-tax profit slumping 77% through to 30th September while also scrapping 2022 targets due to the uncertainty of the pandemic.

Oil prices paused following recent gains with WTI and Brent crude down -1.58% and -1.67% respectively. Base metals were mixed with aluminium and nickel down -0.83% and -1.13% while copper edged +0.10% higher. Precious metals gold and silver rose +0.35% and +0.27% to US$1,813.91 and US$23.42.

Economic data:

  • U.K. House Prices (YoY Nov) 18:00
  • E.Z. Consumer Confidence (MoM Nov) 21:00

This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.



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Fred M.

Hi I just wanted to know your opinion about the effect of when the job keeper payments finish will have on the market? Regards Fred

Shannon Rivkin

Hi Fred,

To some degree, I think the market is anticipating an impact from the end of Jobkeeper and, on the back of the commentary from the banks, is pricing in some caution but how big an impact it has will play a role. We are definitely wary of this period but feel the banks are best placed to judge the future impact with the ongoing dialogue with their business and home loan customers. So, overall I would say we’re cautiously optimistic that the program has been successful and the economy can be weaned off it.

Shannon Rivkin

Anonymous User

Sbm will be able to cross it’s historical high of 6 ? After all the price and production is getting better and when it was 6 it had much less to offer. Comments please!

Oliver Gordon

Hello, I get highs of around $5 a share from both July 2018 and February 2019. The share price has rallied quite a bit over the past 3-4 months, and with resistance at $4, not far above current levels, I would be surprised to see prices just continue higher at the recent pace. Also, what the gold price does from here will have a large impact. The price has recently gone to new all time highs above US$1960 an ounce, however it appears sentiment is getting very bullish at the moment, which often occurs closer to the end than the… Read more »

Riki S.

Hi Oliver – nice article.

As long as the US has a dysfunctional approach to virus reality and subsequent management, the economic risks are significant. There’s a complete and utter disconnect between the US equity market and the real economy, regardless of the typical forward looking perspective. The market sentiment is emotive, better to look at what’s happening in the bond market for something that is likely to resemble the underlying forward impact – if they push through recent low levels, then watch the …. hit the fan!

Brian S.

Why has ZEN dropped so much today? Doesn’t their latest report show that take over is still proceeding with the offer of $1.01 ?

Daryl L.

I bought more at this price Last Week! Good opportunity to park some $s for a Great return. VL recently confirmed this.

Shannon Rivkin

Hi Daryl,

Completely agree with you! Should be a stress-free parking spot.


Shannon Rivkin

Hi Brian,

I’m sorry I’m only getting back to you now as this question somehow slipped through the cracks. The short answer is that we have seen risk spreads blow out across all arbitrage investments. I don’t think this means the bid is less likely to go through but rather that the return required from investors is higher for their capital investments. The conditions attached to the deal look likely to be satisfied, so we remain happy for members to buy/hold at current levels.

Shannon Rivkin

Anonymous User

Hello Shannon,, the banks stocks,, why have been in downtrend for nearly 5 years now?? Wespac example.. .. what is your opinion please?? target

Agustin Benitez

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