North American markets today, Wednesday, viewed several hours before opening at 9:30 a.m. EST look poised to start mixed. The Dow is in positive terrain but the S&P 500 and NASDAQ are negative. However, the S&P 500 is slowly climbing and it is possible – though not a given—that it will go flat or edge into positive terrain before or after market opening. The NASDAQ is also climbing slowly and it is conceivable – but again certainly not a given -- that it could make the jump from negative to positive during the morning.
Canadian indicators are positive at time of writing.
European and British markets are open and major indicators there are in positive territory.
Amongst precious metals gold and silver are down.
Amongst currencies the Euro, British pound sterling and Canadian dollar are all down against the American greenback. The greenback might strengthen during the day today, according to Jeremy Thomson-Cook, Chief Economist at London-based payments specialist Equals Money. “Today’s Beige Book announcement from the Federal Reserve will not move things too much although there are likely to be headlines focusing on latent inflation pressures which could offer some US$ strength later in the session,” he says.
The relationship between the currencies looks set to continue changing, according to Thomson-Cook. “Despite a pickup in inflation in the Eurozone to 2%, every man, woman and their dogs believe that the ECB is going to stay in its ultra-accommodative stance for a long time,” he explains. “That should be something that weakens the Euro but as we have seen in the past 9 months or so, widening and deepening recovery prospects for both the Eurozone and global economies should support the single currency especially against the US$.”
This follows Tuesday’s trading session after holidays in the United States and United Kingdom in which the S&P 500 financial sector hit a record high, though not all sectors performed as well.
“Growth sectors such as health care and tech stocks continue to struggle compared to the cyclical areas such as mining and banking, while in the UK commodity prices have driven the gains for the FTSE 100,” explains Chris Beauchamp, Chief Market Strategist at IG Group, a London-based brokerage. American and Chinese manufacturing data contributed to the results.
Beauchamp expects further job growth in the upcoming ADP National Employment Report expected on Thursday and the U; S. Department of Labor’s Bureau of Labor Statistics report scheduled for Friday.
Several developments yesterday highlight the fact that individual events can add to the volatility of specific stocks. The U. S. Supreme Court ruled against Johnson and Johnson’s request to overturn an award of $212 billion damages to a group pf women who claimed that their cancer was caused by asbestos in JNJ powdered products. The women had previously won the ruling in a Missouri State Court. The Missouri Court of Appeals subsequently ruled against parts of JNJ’s appeal but reduced the award to $2.12 billion from the original $4.9 billion set by the jury in the State Court case. JNJ stock started the day at $170.17 but ended the day down $3.72 at $165.53, a drop due at least in part to the news.
Also yesterday, JBS USA canceled shifts at American and Canadian meat plants after being hit by a cyber attack on the weekend, according to a Reuters report. This threatens to disrupt supply chains and boost food prices, according to the same report. The attack also caused the company’s Australian operations to shut down on Monday. According to Reuters, the Biden administration is asking Russia for answers as the attack appears to have originated there. This follows the cyber attack on the Colonial Pipeline which crippled fuel delivery to the U. S. Southeast. The two attacks lead some analysts to believe that hackers are concentrating on the commodities sector.
BitDefender, a Romania-based software company estimates that a 485% year-over-year increase in global ransomware reports occurred in 2020.
The cyber security sector stands to benefit from these incidents and numbers. Additionally, employers who allow employees to continue working from home with the recovery will also want cyber safeguards. Top-rated cyber security firm Telos Corp. slipped during the session to close at $33.14 but had increased to $34.07 during the afternoon. Zscaler Inc. another top-rated cyber security firm ranged between $190.05 and $195.95 during the day, closing at $191.77
Analysts generally have ambitious targets for these stocks. Wedbush Securities has a target price on Telos at $47.00 and on Zscaler at $240.
(Please note: These are not specific stock recommendations but suggestions for discussion between advisor and client.)
Al Emid is a financial journalist broadcaster and author, His next book. The 2021 Emid Report on Volatility is scheduled for a Fall release.