North American markets today, Monday, viewed several hours before the 9:30 a.m. EST opening appear poised to start very mixed with all major indicators in the red at time of writing. However, the NASDAQ and the S&P 500 are improving, and it is possible – though not assured – that either or both will ease into the green by or before market opening. Canadian indicators are flat at time of writing and do not appear likely to improve substantially today.
The success of Richard Branson’s space flight will overhang shares of. Virgin Galactic Holdings Inc. which closed at $49.27 on Friday, down $3.42 on the day. On Friday, out of eleven analysts, four had Buy ratings, six had Hold ratings and one (Bank of America) had a Sell rating on it.
European markets are open at time of writing and all major indicators there are in the red.
Amongst currencies the Euro, British pound sterling and Canadian dollar are all down against the American greenback.
Amongst precious metals, the safe havens of gold and silver are down.
Markets this week may be affected positively by results from several sectors including brokerage, banking, travel and consumer goods.
In brokerage, J.P. Morgan Chase & Co. and Goldman Sachs Group report second quarter results tomorrow and investors will look for clues about whether trading and investment banking volumes can continue at current levels. Morgan Stanley reports on Thursday and the questions will be roughly the same.
In banking, Bank of America Corp., Wells Fargo & Co. and Citigroup Inc. report on Wednesday and investors will look for clues on consumer and commercial activities in the recovery.
(I’ll pick up on the other sectors later in the week.)
These sectors have a common thread: they all both reflect where we stand in the recovery and intimate where we might go in the coming months.
In previous editions of this column, I have suggested that as the smoke clears from the pandemic and we edge our way back to normal, investors are confronted with a number of serious decisions and that some of them might have seemed near-unthinkable in the depths of the crisis.
At or near the top of the formerly unthinkable list is how to play the energy sector, which seems to have come back from the dead. “The sector that has really outperformed has been the one that many have been writing obituaries for --- the conventional oil and gas energy sector,” explains Gavin Graham, London-based financial analyst and former chief investment officer for several major banks.
Graham stays that oil and gas stocks, especially those of companies that survived the collapse of oil prices in the darkest days of the pandemic, have been appreciating handily. American majors including ExxonMobil Corp. Chevron Corp and ConocoPhillips are up 56% 26% and 56% respectively year-to-date. The Canadian majors such as Canadian Natural Resources Ltd and Suncor Energy Inc. are up 50% and 41%., respectively. European majors, handicapped by dividend cuts last year and the tight timetable to decarbonize their businesses by the mid-2030s, are up Royal Dutch Shell PLC, BP PLC and ENI SpA up 18% 31% and 20% respectively. A large part of their appeal for worried investors is their dividends., Exxon and Chevron yield 5.5% and 5% each, BP and CNQ 4.6% and 4.1%, and Royal Dutch and ENI 3.5% and 3.3%.
A large part of investing for the recovery is the need to reduce the stress and volatility worrying many investors. For those worried about what can happen next, that combination of price appreciation and dividends might make these stocks fuel for conversation between advisors and their clients. It is reasonable to believe that these stocks will be beneficiaries as the economies of the United States and many other countries recover.
Disclosure: I do not own any shares in any company mentioned in this column.