Spotlight on Airbnb
Airbnb debuted on the NASDAQ on Thursday, December 10. This IPO saw the travel company valued at $100 billion by the end of the day, making it the most prominent firm to double its value on the first trading day. The initial price, set on Wednesday just before sales began, was $68 per share. Yet by Thursday morning, they had already jumped to $146 per share. This set a pattern for a massive day of buying. Just moments after the markets opened, the price had soared by 127% to $154. What is the next move for the company after this massive IPO? Airbnb has plans to expand its operations into India and South America, so it would seem that the only way for the home-rental company to go is up.
Brexit seems to have taken over coronavirus as the dominant factor influencing the markets. Talks recently resumed with many investors confident some sort of deal will be reached. The pound fell last week as investors moved finance to limit any no-deal Brexit impacts. A no-deal Brexit is expected to bring higher tariffs for those exporting to the UK and broader hits to the economy, especially in the short term. However, a weakened pound helped the FTSE's big multinational firms as exports to trading partners became cheaper, with British American Tobacco's share price up 4.3%. Whether positive vaccine news can overshadow the doom and gloom of Brexit negotiations to keep the FTSE up will be simply down to time.
Whether there's a deal or not, come January 2021 the FTSE might see a steady increase as there will be a new degree of certainty not seen for months and in some way years.
It appears that Britain deciding to lead the way as the first country to roll out a coronavirus vaccine has had positive impacts that have reached all across the world. It represents a proverbial light at the end of the tunnel for one of the strangest years in modern history. News of the vaccine sparked optimism that the end of this nightmarish pandemic is in sight and the world can go back to the way things were. For the Nikkei 225, it closed a few points below the yearly high at ¥26,817. It was a positive week for the market with the price above the 50 days weighted moving average. The 2020 peak was the highest the market has been since 1991. This paints a positive picture for the end of the year as a new rise may be around the corner.
Germany's Dax fell slightly by 0.3% last week. Investors are split between optimism due to vaccine news and pessimism amid general coronavirus concerns with many countries still in some form or another of lockdown. Brexit news dominated the markets by the end of the week, as hopes of a deal became smaller and smaller. Prime Minister Boris Johnson announced on Wednesday how no deal seems most likely. Automotive companies suffered greatly with this news, with the share prices of both Volkswagen and BMW falling. It is thought that the fluctuating euro contributed to this, combined with Brexit uncertainty.
Energy seems to be leading the way in booming shares on the S&P 500, up 30% since the start of November. Again, companies can thank Covid-19 for this growth. With greater prospects of increased energy demand, people become more active with spending than before. The market closed slightly lower than its 2020 peak, so no detrimental losses here. It seems stimulus hopes resulting from a Biden win are slowing as the Democrats and Republicans continue to fight over a fiscal bill providing aid to state and local governments. On Thursday, the US Food and Drug Administration will meet to see if they will approve the wider administration of Pfizer's vaccine, which was approved for emergency use on Tuesday. If approved, it will most likely positively impact shares, as hopes of life returning to normal grow. It remains to be seen what next week's meeting results will be and if we will get a clearer idea of the extent of the impact on the vaccine.
It's been another busy week for the world's markets, encouraging news of a vaccine have dominated world headlines affecting the markets accordingly. Brexit outshines vaccine news in Europe somewhat with the detrimental effects of a no-deal on everyone's mind. Like most people, investors hope for a UK – EU trade deal, but we do not know for sure what relationship the UK will have with Europe come next year. While a no-deal Brexit seems most probable, an understanding between the UK and Europe is not of the books entirely. With all the events that have transpired this year, nobody can say for sure.