- European shares open lower, Wall Street points flat.
- Chesapeake Energy files Chapter 11 Bankruptcy.
- Top companies boycott Facebook advertising.
- EUR/GBP Reaches 3-month peak.
“There is no harm in being sometimes wrong, especially if one is promptly found out.” – John Maynard Keynes
It was a downbeat start to the week with shares in Asia falling after the late drop on Wall Street Friday. European shares are headed lower in early trading, and Wall Street futures are sluggish.
The dollar was in demand as a haven last week, but the euro, pound, and other G10 FX are staging a recovery on Monday.
Gold prices rebounded sharply off $1750 per oz on Friday and sits under $10 short of new 8-year highs. The price of oil is lower, with Brent crude again dropping below $40 per oz.
News about the rising spread of the coronavirus didn’t get much better over the weekend. A total of 10 million cases worldwide, a new record daily rise in total US cases along with new spikes in Texas and Florida were all bad omens for the trajectory of the pandemic.
Top US shale producer Chesapeake energy finally succumbed to years of high debts and crushed oil prices by filing for bankruptcy protection. It has agreed to a series of credit lines to keep it operating through Chapter 11. With debt write-offs and a lot more asset sales, the company might come out of the other side, but at a greatly reduced scale. It’s been a strangely good time for bankrupt companies (Hertz) in the last month, so who knows.
Shares of Facebook and other top tech stocks fell heavily in Friday’s sell-off as investors took profits near record highs. Facebook shares will be in focus again on Monday as the company feels the pressure of more top advertisers ‘pausing’ ad spend on the platform in support of the ‘stop hate for profit’ campaign initiated after the killing of George Floyd. The financial impact of a few advertisers, even big ones like Unilever and Coca-Cola pulling spending on Facebook’s $70 billion annual hauls will be minimal. Investors will just be mindful of any kind of snowball effect.
Chart: EUR/GBP (4-months)
EUR/GBP has moved to a 3-month high, having held consistently above 0.90. A new rally to 0.95 would see the price back at the March peak.