Wall Street gets more bullish on equities


Wall Street banks are getting increasingly bullish on the outlook for equity markets as election risks subside and the Pfizer vaccine creates a much rosier outlook for 2021.

Goldman Sachs raised its 2020 target for the S&P 500 to 3,700 from 3,600 previously. This implies a forward PE multiple of 21x, rising to 22x by the end of 2021.

Strategists at the bank say that a vaccine is a more important development for the economy and markets than the prospective policies of a Biden presidency. And the outlook for 2021 is extremely bullish, with the year-end price target of 4,300, implying 16% upside.

It comes after fellow Wall Street investment bank raised its year-end price target for the S&P 500 to 3,600 and said the election outcome created a ‘market nirvana’. JPM also raised its 2021 forecast for the index to 4,000.

For Europe, GS expects a “V(alue)-shaped recovery” in 2021. They see growth making a marked acceleration and expect a strong bounce in STOXX Europe earnings with policy support to remain in place.

On FTSE 100, Goldman sees the improved macro and commodities environment as supportive going forward. The bank forecasts the FTSE 100 to reach 7,200 by the end of 2021, implying 20% total return in GBP.

Since Pfizer announced its vaccine is 90% effective in phase three clinical trials markets have reacted positively though there has been a notable rotation out of growth stocks and into value and cyclical areas. This has best been demonstrated by the rally in the small cap Russell 2000 and decline in the Nasdaq 100. Whether this trend continues remains to be seen but it’s clear markets are on the move again.

Top Stocks of 2020 Update


We have updated our list of the top-performing stocks of 2020. Take a look to see which companies have emerged as winners across the year so far.

Top performing UK stocks: FTSE 350 

    Percentage Change 
Name  RIC  YTD 
FTSE 350 Index  .FTLC  -17.3 
AO World PLC  AO.L  288.7 
Indivior PLC  INDV.L  199.0 
Premier Foods PLC  PFD.L  172.1 
CMC Markets PLC  CMCX.L  132.3 
Petropavlovsk PLC  POG.L  116.6 
Avon Rubber PLC  AVON.L  98.1 
Baillie Gifford US Growth Trust PLC  USAB.L  96.4 
Scottish Mortgage Investment Trust PLC  SMT.L  87.4 
Ocado Group PLC  OCDO.L  78.5 
Games Workshop Group PLC  GAW.L  73.5 
Fresnillo PLC  FRES.L  73.2 
Fidelity China Special Situations PLC  FCSS.L  68.7 
Kainos Group PLC  KNOS.L  68.1 
Allianz Technology Trust PLC  ATT.L  64.5 
Edinburgh Worldwide Investment Trust PLC  EWI.L  56.8 
Pershing Square Holdings Ltd  PSHP.L  55.8 
JPMorgan Japanese Investment Trust PLC  JFJ.L  55.2 
Plus500 Ltd  PLUSP.L  54.9 
Gamesys Group PLC  GYS.L  53.3 
888 Holdings PLC  888.L  52.1 
Ninety One PLC  N91.L  51.5 
Baillie Gifford Shin Nippon PLC  BGS.L  50.2 
Renishaw PLC  RSW.L  48.8 
Flutter Entertainment PLC  FLTRF.L  47.6 
William Hill PLC  WMH.L  43.4 
Polar Capital Technology Trust PLC  PCT.L  40.6 
Hastings Group Holdings PLC  HSTG.L  39.5 


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Top performing US stocks: S&P 500 

    Percentage Change 
Name  RIC  YTD 
S&P 500 Index  .SPX  9.9 
Carrier Global Corp  CARR.K  223.3 
ETSY Inc  ETSY.O  173.6 
NVIDIA Corp  NVDA.O  131.7 
West Pharmaceutical Services Inc  WST  90.6 
Advanced Micro Devices Inc  AMD.O  81.2 
Catalent Inc  CTLT.K  81.0 
L Brands Inc  LB  79.5 
ServiceNow Inc  NOW  77.8 
FedEx Corp  FDX  74.5 
Rollins Inc  ROL  72.1 
Cadence Design Systems Inc  CDNS.O  70.9 
Align Technology Inc  ALGN.O  70.9 
PayPal Holdings Inc  PYPL.O  70.8 
Amazon.com Inc  AMZN.O  70.1 
Synopsys Inc  SNPS.O  68.0 
IDEXX Laboratories Inc  IDXX.O  67.1 
ABIOMED Inc  ABMD.O  63.9 
Qualcomm Inc  QCOM.O  61.6 
Quanta Services Inc  PWR  60.9 
Albemarle Corp  ALB  59.8 
Salesforce.Com Inc  CRM  59.4 
Apple Inc  AAPL.O  58.4 
Old Dominion Freight Line Inc  ODFL.O  57.5 
DexCom Inc  DXCM.O  57.2 
Bio Rad Laboratories Inc  BIO  56.7 
T-Mobile US Inc  TMUS.O  56.6 
Paycom Software Inc  PAYC.K  53.0 
Chipotle Mexican Grill Inc  CMG  52.7 


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Top performing European stocks: Stoxx 600 


    Percentage Change 
Name  RIC  YTD 
STOXX Europe 600 EUR Price Index  .STOXX  -8.4 
Sinch AB (publ)  SINCH.ST  203.7 
Evolution Gaming Group AB (publ)  EVOG.ST  139.6 
Hellofresh SE  HFGG.DE  123.4 
Nel ASA  NEL.OL  120.2 
Sartorius Stedim Biotech SA  STDM.PA  116.8 
Adyen NV  ADYEN.AS  116.4 
Pandora A/S  PNDORA.CO  99.2 
Sartorius AG  SATG_p.DE  93.0 
Ambu A/S  AMBUb.CO  84.8 
Dino Polska SA  DNP.WA  80.6 
Ocado Group PLC  OCDO.L  78.5 
Kinnevik AB  KINVb.ST  76.3 
Zalando SE  ZALG.DE  75.7 
Lonza Group AG  LONN.S  75.5 
Games Workshop Group PLC  GAW.L  73.5 
Fresnillo PLC  FRES.L  73.2 
Rockwool International A/S  ROCKb.CO  67.7 
Vestas Wind Systems A/S  VWS.CO  66.3 
Neste Oyj  NESTE.HE  65.1 
Siemens Gamesa Renewable Energy SA  SGREN.MC  62.2 
Genmab A/S  GMAB.CO  61.0 
Logitech International SA  LOGN.S  60.6 
GN Store Nord A/S  GN.CO  58.3 
EDP Renovaveis SA  EDPR.LS  58.1 
Netcompany Group A/S  NETCG.CO  57.9 
Investment AB Latour  LATOb.ST  57.1 
Orsted A/S  ORSTED.CO  54. 


Trade Stoxx

Source: Reuters Eikon 


Stocks mixed after vaccine melt-up, watch for ongoing rotation

Morning Note

First the relief, now for a wee dose of reality. Stock markets are looking a little more cautious after yesterday’s massive surge on news that Pfizer and Biontech have a vaccine that is 90% effective – investors will now show a tad more caution that the kneejerk rally is out of the way.

Markets have a habit of overshooting on the way down, and on the way back up. Nevertheless, an effective vaccine changes the game for investors, at the very least in terms of relative valuations and the premium we are willing to pay for growth.

We have a lot more clarity now than a week ago for two big reasons. Joe Biden is all but certain to become the next president of the United States. More importantly, a vaccine is coming.

The worst fears – of enduring year after year of masks, of having semi-permanent lockdowns and restrictions on our liberties lasting for ever – should not come to pass.

All we need now is a Brexit deal this week as the cherry on the cake. What we in Britain and Europe need more than anything is a confidence injection – and a working vaccine does that. A comprehensive FTA with the EU would help, too.

The FTSE 100 rose over 4.6%, settling just under 6,200. The DAX rose almost 5% and the CAC in Paris was up almost 8%. US stocks opened considerably higher as they took the cue from Europe, but closed less in the green.

The Dow rallied 800 points but that was about half the gains at the high of the day, which was a new intra-day peak. The S&P 500 finished up over 1% but also at the lows of the day.

In a clear signal of a major rotation from growth to value, the Nasdaq 100 fell over 2%, while the Russell 2000 climbed over 4%.

This is a trade that seems to have legs. Due to the makeup of indices and heavy reliance on the big tech names (5 big tech names make up about a quarter of the S&P 500), rotation of this nature may act as a headwind and means it’s not a straight line up.

It will be messy as portfolios rebalance and we can expect more outsize moves in some of the most exposed stocks to the vaccine. But, overall, the landscape for equity markets is favourable.

Yesterday we saw some very high volumes in some of the stocks worst affected by the pandemic on the platform.

S&P 500 volume leaders included American Airlines (+15%), Pfizer (+7.7%) and Carnival (+39%).

Netflix (-9%) and Zoom (-17%) indicated the degree to which the stay-at-home trade was unwound.

On the UK market, there was big volume in Cineworld (+40%), IAG (+25%) Rolls-Royce (+44%), whilst Ocado (-12%) and JustEat (-9%) were offered as part of the rotation.

We do have some uncomfortable questions to answer – does a vaccine on the near horizon preclude more stimulus? Perhaps, a lot depends on the Senate runoffs in Georgia, but the US economy needs a bridge to get to the sunlit uplands of vaccine country.

Europe can’t even get its stimulus delivered, whilst in the UK the government continues to offer support to business but does not seem willing to acknowledge the other problems created by lockdowns – a vaccine may give them further excuse to restrict liberties as ‘it will only be for a little longer’.

The vaccine won’t stop this from being a very tough winter in Britain, Europe, and elsewhere. Data this morning showed the UK unemployment rate in the three months to September rose to 4.8% as the number of people out of work rose by 243,000.

Does a vaccine change the game for the Fed? It ought to, but if experience is anything to go by, the Fed won’t want to rock the boat anytime soon. Several Fed speakers on tap this week will give a clue – expect them to stress the need for fiscal support now as a vaccine won’t available en masse for some months. Overall, the outlook for markets is a lot more positive.

European markets are trading a bit mixed this morning. The FTSE 100 rose above 6,200 while the DAX faded 0.5% to 13,000.

Travel stocks rose again on Tuesday, building on some very big gains notched in the previous session. So too did banks – a vaccine will steepen the yield curve which will make a significant difference to banks’ net interest margins. It should also help limit credit impairments.

Treasury yields rose – the US 10-year yield leapt to 0.94%, the highest since March, which sent the 2yr/10yr spread to its widest in almost three years.

Gold sank to the bottom of the recent range, testing the Sep lows at $1,850 before catching some bid to recover to around $1,887 this morning. UK 10 year gilt yields also jumped to its highest level in some months at 0.377%.

In FX, the vaccine could help risk-on currencies like sterling and the Aussie. GBPUSD advanced to 1.32 and trades with upside momentum in play.

Brexit talks this week threaten headline risk but increasingly the market believes that the posturing over fishing rights and level playing fields will give way to the cold, hard reality of securing a deal in time for Christmas.

Vaccine winners and losers


Stocks have rallied on news that we could soon have an effective vaccine against Covid-19.

Initial optimism is exceedingly high and could fade – we should not be jumping any guns here – but ultimately a vaccine that works effectively would be good for the economy and favours the cyclical parts of the market that we thought were going to struggle as a split Congress meant less stimulus.

A working vaccine is positive for cyclicals and value – the reopening trade essentially. The dichotomy in the market is stark: the biggest gainers in a frantic session today are among those stocks worst hit by the pandemic – travel and leisure chiefly, whilst Covid winners are doing poorly. We should be careful in overreacting – but it’s clear the market is forward-looking and pricing in recovery in a number of beaten-down areas next year.

Several questions remain, which won’t be answered right away.

When does the vaccine get rolled out fully? So how quickly are we ‘back to normal’ effectively? The UK has pre-ordered 30m doses of the vaccine, but what about other countries?

Given the US election result, does this make it harder to agree stimulus that is required now for the economy?
If this is a higher yield, higher inflation world, how does the Fed start to adjust? Will it even consider thinking about thinking about raising rates? Lots of Fed speakers this week to frantically rewrite their speeches.


Major indices (ex-Nasdaq). The Dow is surging 1,500pts and set to open at a record high. The FTSE 100 is up over 5% with all sectors green, led by energy and financial and Utilities, Tech and Healthcare at the bottom but still positive as the news lifted the boats.

The Dow Jones shows how stocks are performing well thanks to the positive vaccine news.

Travel stocks like IAG +30% and EasyJet +26% are among the best risers on the UK market, whilst Rolls-Royce +46% led the charge. Cineworld +47% and Carnival +31% also indicative of a major rotation back into these stocks that have been hardest hit by the pandemic. In the case of Cineworld the 9.4% stock out on loan points to a nasty short squeeze that may exaggerate the move.

Pubs and restaurants like JDW +15% and Restaurant Group +26% were among the other big gainers from the news. Back to normal means back to the pub – happy days!

Energy – A vaccine should help boost demand more quickly. As crude prices rallied, Shell +12% and BP +15% boosted the FTSE 100.

Financials – A vaccine is a yield steepener – Lloyds and Barclays both +10%.

Crude oil naturally rose on expectations that a working vaccine will equate to a swifter demand recovery, at least much quicker than we would have thought only yesterday.

These stocks are winning with the news of the covid vaccine progress.



Covid winners: Stocks that won because of the pandemic are naturally on the hook. Stay at home and WFH stocks fell, hurting the Nasdaq. Zoom –15% and Peloton –11% pre-market is indicative of the rotation out of these Covid winners into reopening trades.

US tech is suffering as a potential lockdown solution emerges.


UK stocks in the red included the main winners from the pandemic – Ocado, Fresnillo and Kingfisher (back to normal means no DIY – oh happy days)

Stocks like these are slipping under the covid vaccine announcement.

Keep an eye on these stocks when the US cash equities open later and (Covid Winners Basket).

These stocks could go up or down, depending on vaccine progress.

Bonds – US Treasuries were offered with the 10-year yield spiking north of 0.92%. Inflation could come through next year with large excess savings to be deployed in many sectors of the economy, notably in travel.

Gold – higher yields weighed on gold prices, though we would expect inflation expectations to rise and this could offer ongoing support to prices.


Gold is in an odd place, thanks to Pfizer's vaccine progress.


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