Viewed several hours before the opening bell this morning, the markets are shaping up to prove again, as was the case yesterday, the volatility of the current investing environment. At time of writing, most major North American stock indicators are firmly in the red, pulled down by recessionary and virus fears, some disappointing results and a general belief that no stimulus plan will come through before the election.
European stock indicators are also firmly in the red at time of writing, pulled down by several factors including fear of increased lockdowns and their economic impact, according to Joshua Mahony, Senior Market Analyst at IG Group, a London stock firm. “Expectations of a fresh bout of restrictions in France and Germany have sparked yet another selloff in Europe, with the DAX entering correction territory once again,” he says. “Mainland European markets are once again at the forefront of a collapse in equity valuations, with a second bout of nationwide lockdowns raising the chance of a double-dip recession,” he explains, evoking a dreaded scenario for Europe.
These indicators can change during the runup to the opening bell and at any time afterwards, especially due to nervousness about developments in Washington. As a case in point, before market opening yesterday, most North American indicators were in the green, but the S&P 500 and DOW indices slipped into the red while the NASDAQ stayed in the green until closing. In Canada, the TSX Composite and TSX 60 dropped into negative territory while the TSX Venture stayed positive until closing.
Yesterday’s selling was less frantic than Monday’s plunge, suggesting a possibility that while the slide may continue today, it might be less brutal.
Today will see both negative and positive results from the pandemic. On the negative side, Boeing Co. reports third quarter results, likely with a serious loss driven by deferred orders because of the pandemic crisis and the grounding of its 737 MAX following two deadly tragedies. General Electric also reports third quarter results today with expectations of a heavy loss driven in part by the crisis.
On the positive side, eBay posts its third quarter results today and is expected to report a large increase in earnings, driven by the stay-at-home shopping phenomenon. United Parcel Service Inc. will also be reporting third quarter results, likely also with increases due to deliveries to online shoppers.
The biggest pandemic-related surprise to date this week came with confirmation that three properties of the legendary Las Vegas Sands Corp. are on the market. A Reuters report points out that the gambling industry, which thrives on air travel and large groups has been one of the hardest hit industries during the COVID-19 pandemic.
A sale of the Sands Expo Convention Center, the Venetian Resort Las Vegas and the Palazzo could bring in $6 billion according a source in the same Reuters report.
The news proves again the tremendous effect of the pandemic. It can reasonably be suggested that if an analyst had predicted before the onset of the crisis that Sands Chairman and Chief Executive Officer Sheldon Adelson would put these properties up for sale, the analysis would not have been widely accepted. Investors had been wary at least since August when Fitch Ratings revised its outlook on the company to ‘Negative’ from ‘Stable’. At the time, Fitch cited ‘dim’ prospects for the group business …lackluster near-term operating prospects’. and ‘the difficulty in predicting the pace of recovery from the pandemic’.
Disclosure: I do not own shares in any company mentioned in this column.