Stock markets around the world were in the red on Wednesday, with the Dow Jones Industrial Average’s 3.4% fall, constituting its worst day since June. Elsewhere, the FTSE 100 was down 2.6%, the German Dax fell 4.2% and the S&P 500 closed the day 3.5% lower. Many of the US tech giants fell sharply, as the CEOs of Facebook, Twitter and Alphabet (Google’s parent) testified in front of a virtual Senate hearing that focused on their role in public discourse during the Presidential election.

The main factor hurting sentiment appeared to be surging Covid-19 cases in the US and many other major markets. New cases have soared past the peak levels since in summer, when many parts of the US were subject to strict lockdowns. On Tuesday, the 7-day average new case figure hit an all-time high of 71,832 in the US, a record according to CNBC.

Boeing to layoff 7,000 more staff

All 11 of the S&P 500’s sectors were in the red on Wednesday, with the communication services, energy and information technology sectors all down more than 4%. Just eight stocks in the index gained more than 1%, while seven companies fell by more than 8.5%. As in other major coronavirus-linked selloffs, cruise names were among the hardest hit, with Carnival  (CCL) down 10.6% and Norwegian Cruise Line (NCLH) off by 9.1%. Of the Dow’s 30 names, seven fell by more than 4%, with Microsoft, Apple, Nike and more sitting in that group, while only insurer Travelers (TRV) posted a positive day.

In corporate news, Boeing (BA) said on Wednesday that it plans to lay off 7,000 additional staff, with the goal of having a workforce of 130,000 at the end of 2021. The firm entered 2020 with 160,000 employees, and already announced major job cuts earlier in the year.

S&P 500: -3.5% Wednesday, +1.3% YTD (SPX, SPY)

Dow Jones Industrial Average: -3.4% Wednesday, -7.1% YTD (DIA)

Nasdaq Composite: -3.7% Wednesday, +22.7% YTD (COMP)

Miners among biggest FTSE 100 losers in sell-off

On Wednesday, it was widely reported that the UK outbreak is now doubling in size every nine days, putting pressure on the Prime Minister to consider a second full lockdown - as is being implemented in Germany and France. In the FTSE 100 on Wednesday, just four names had a positive day, with none of those gaining more than 1%. Miners Fresnillo (FNLPF), Polymetal International (POYYF) and Anglo American (NGLOY) were among the names that dragged the index lower.

The FTSE 250 fell 1.9% on Wednesday, taking its year-to-date loss back past the 20% mark. Brickmaker Ibstock,  transport operator FirstGroup (FGROF) and Cineworld (CNNWF) were among the names deepest in the red, losing 8.9%, 7.5% and 6.9% respectively.

FTSE 100: -2.6% Wednesday, -26% YTD

FTSE 250: -1.9% Wednesday, -21.2% YTD

What to watch

Big tech earnings: Three trillion-dollar companies report quarterly earnings on Thursday, with Apple (AAPL), Amazon (AMZN) and Alphabet (GOOGL) on deck. Facebook (FB) and Twitter (TWTR)also deliver their own earnings reports. All of those firms are firmly in the regulatory spotlight, with lawmakers investigating the role of big tech in public discourse, and the Justice Department preparing an antitrust case against Google that in part is about an exclusive relationship between Apple and Google. Points to watch include Apple’s initial report on sales of the new iPhone 12, and insight into Amazon’s Prime Day event sales.

Activision Blizzard: Game developer Activision (ATVI) delivers its third-quarter earnings update on Thursday, on the back of substantial sales growth driven by the pandemic keeping consumers at home. Momentum will be a key question for the company, with investors watching for whether growth in sales has sustained as the pandemic has worn on. One metric to look for is the company’s monthly active users figure, which is important given the revenue the firm generates from subscription services and add-on packages for its games. Currently, Wall Street analysts overwhelmingly favour a buy rating on the stock, and expectations for the firm’s Q3 earnings per share figure have risen sharply over the past three months.

Spotify: Spotify (SPOT) has enjoyed huge growth in 2020, with its share price climbing more than 80%, as the number of premium subscribers to the company’s music streaming service has continued to grow rapidly despite the economic hit from the pandemic. Premium subscriber growth and guidance from management on future growth will be a key point of the company’s Thursday earnings report, along with the state of the advertising market. The company could also potentially use its position of strength for a pricing increase.

More than 100 firms with market caps of greater than $10bn report quarterly earnings in the US on Thursday, including Comcast (CMCSA), Starbucks (SBUX), Keurig Dr. Pepper (KDP), Kraft Heinz (KHC), T. Rowe Price (TROW) and more.

Crypto corner: bitcoin slips as Chinese miners down tools

Bitcoin (BITCOMP) has come off its recent high, dropping to a low of $12,891. The world’s major cryptoasset is trading around $13,263 at the time of writing today however, some 3% down from its 2020 high of $13,722.

The pullback comes amid reports of the rapidly decreasing hash rate of bitcoin (the measure of the processing power of the cryptoasset’s network). According to Coindesk this is thanks to miners, largely in China, ending their operations and selling off their earnings at the end of the Chinese rainy season.

Higher hash rates from China coincide with its rainy season as the country is highly dependent on hydroelectric power. During the rainy season electricity gets much cheaper, making bitcoin mining a more affordable process. The sudden loss of momentum is also attributed to coronavirus and the US presidential election, where uncertainty is leading investors to cash in investments raising the value of the US dollar.

All data, figures & charts are valid as of 29/10/2020.