Bitcoin hits record high followed by sharp sell-off

Bitcoin, the world’s largest cryptoasset, reportedly hit a new all-time high of $19,510 yesterday, beating the previous high of $19,458 set in December 2017, according to the Financial Times (FT). The cryptoasset has risen 75% in the past three months. From lows in March it has returned a staggering 400%.

The record high was disputed by some data providers. Leading crypto outlet CoinDesk, unlike the FT, is unwilling to call the high. This is because of the cryptoasset’s decentralised nature, as prices and valuations fluctuate depending on the data and analysis used. This leads to price discrepancies between outlets and a variation on deciding where the current price is precisely.

Currently trading down around 10%, bitcoin is facing its first real test of selling pressure in some time, testing the 20 day moving average. Profit taking was always going to be an inevitability at some point, investors will now be trying to understand if this is a reversal in momentum or a mere pause before another shot at $20,000.

US markets dropped back from record highs set earlier this week, with both the Dow and the S&P 500 dropping marginally. US markets will reopen on Friday for a shorter trading session than normal.

Salesforce in Slack takeover talks

Business software firm Salesforce is in talks to buy popular workplace communications firm Slack, with a deal reportedly possible within days. Slack is a popular alternative to workplace emails and will see Salesforce step out of the technical side of business software into a more mainstream sphere of communications. Slack’s share price was up nearly 38% on the news of the takeover talks, while Salesforce’s share price was down -5.4%.

Meanwhile, US markets faced an indifferent day of performance on Wednesday as many set off for the biggest holiday in the US calendar, Thanksgiving. The S&P 500 was off by -0.2% led lower by Gap, down -19.6% thanks to worse than expected earnings results. This was followed by Technip, down -6.3% and the aforementioned Salesforce at -5.4%. Conversely, the best performers on Wednesday in the S&P were Etsy, up 5.4%, Autodesk popping 4.7% and PayPal up 4.1%.

The Dow Jones Industrial Average also closed lower by -0.6%, led down by Salesforce which was added to the index in August, and Chevron, which was off by -3.6%. Modest risers on the day were led by Walgreens Boots Alliance up 1.4% and Apple up 0.8%.

S&P 500: -0.2% Wednesday, +12.4% YTD

Dow Jones Industrial Average: -0.6% Wednesday, +4.7% YTD

Nasdaq Composite: +0.5% Wednesday, +34.8% YTD

FTSE reacts negatively to Sunak economic update

UK markets reacted negatively to Chancellor Rishi Sunak’s spending review update, on the back of poor economic data for the coming years. The Office for Budget Responsibility (OBR) now predicts that the UK economy will contract by 11.3% because of coronavirus – the worst fall in more than 300 years. UK GDP will not return to pre-Covid levels until the 4th quarter of 2022, says the OBR, with the economy growing by 5.5% next year, 6.6% in 2022, then 2.3%, 1.7% and 1.8% in the following years.

On the back of the news, the FTSE 100 dipped, down 0.6%. The FTSE 250 was down more, off 1.1%, but most of this drop was baked in early on as investors changed positioning following the recent rally.

Leading the FTSE 100 lower was IT firm Aveva Group, which fell an eye-watering 20% on the day, unusual for a one-day price in the index. The stock dived after announcing a major rights issue which will see the firm sell £2.8bn worth to help fund its £3.8bn takeover bid of US software group OSIsoft. On the plus side, the biggest riser on the day was Unilever, up 5%, which announced the takeover of supplements firm SmartyPants Vitamins. Meanwhile in the FTSE 250, Genus topped the rankings, rising 6%, while the biggest faller was media company Future PLC, down 17% after it agreed the takeover of GoCompare owner GoCo Group.

FTSE 100: -0.6% Wednesday, -15.2% YTD

FTSE 250: -1.1% Wednesday, -10.6% YTD

What to watch

US Markets: Stock markets in the US are closed on Thursday for Thanksgiving, and close early (1pm ET) on Friday, so there will be no companies reporting today from the US and limited activity on Friday.

Reach plc: UK red-top media firm Reach plc is reporting its interim results on Friday. The company includes a diverse set of print and online media titles such as the Daily Mirror and Daily Express, plus a range of other regional titles. The firm’s share price has traded close to its 2020 high in recent days, but investors should focus on its debt levels as it updates the market. The firm has reasonably strong cash levels, but this is dwarfed by its pile of liabilities which totalled £614.8 million at its last reporting. The group’s stable of media titles are well-positioned to capture more online market share, but its ability to realise gains are hampered by considerations such as pension liabilities and the recent shuttering of two print sites.

OECD Digital Economy Outlook 2020: The OECD is well-known for its influential economic reports and outlooks and the Digital Economy Outlook for 2020 is no exception. The organisation is publishing its latest report on Friday. The outlook will consider trends in the digital economy and analyse opportunities and challenges for the sector. For investors it will provide useful insights into where digital transformations are happening and what trends there are to be followed in the future. The report also looks at policy change from governments around the world, setting the backdrop for the regulatory landscapes companies will need to operate in.

All data, figures & charts are valid as of 26/11/2020.

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