Little on UK agenda aside from deal-or-no-deal over Brexit, but Tesla’s S&P promotion, US stimulus e

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The coming Christmas and New Year fortnight will begin with at least one long-awaited bang.

A much-followed stock for retail and institutional investors, as well as short-sellers, Tesla Inc (NASDAQ:TSLA) will make its debut on the S&P 500 index.

Elsewhere, a long-awaited Brexit deal may be delivered according to the EU’s Sunday midnight deadline, although not necessarily, while a US stimulus package deal deadline also ensures traders keep an eye on their screens this weekend.

UK officials continue to insist a no-deal Brexit is still the most likely outcome, while a number of close followers of the talks expect any deal to be agreed as late as possible in the process.

Brexiters in the Tory party have told BBC they don’t foresee a deal until just after Christmas, enabling a vote in the House of Commons on December 30, with reports that preparations are being made to rush a deal bill through the Commons and the Lords to get any potential deal onto the statute book in one day.

With the talks coming so late, expect more news stories about lorry jams in Kent.

Other macroeconomic data will still dribble out while many investors will retreat for the holidays, such as they are.

For the UK and US, the latest gross domestic product number will be released this coming Tuesday, with more weekly US unemployment figures on the Thursdays and some other releases in the following week.

Tesla: has an index reshuffle ever been so anticipated?

With its shares rising over 600% already in 2020, Tesla’s promotion into the prestigious S&P index on Monday, December 21 will see it slot in at number six on the market cap leaderboard, behind Apple, Microsoft, Amazon.com, Alphabet and Facebook.

As funds tracking the S&P 500 are forced to buy shares in the carmaker and sell an estimated US$40-50bn of shares of other companies to balance the index, this will trigger substantial buying of the shares.

“There is also the possibility that active managers see this as a chance to unload shares onto passive funds at prices near an all-time high,” said analysts at AJ Bell.

While Tesla has notched up five quarters of profitability as car sales head towards boss Elon Musk’s 0.5mln target for the year, detractors bemoan the company’s governance and accounting, the analysts added, while the company faces a big wave of new all-electric competition from legacy carmakers in 2021.

“They argue that the quality of profits and cash flow is not high, given how the sale of regulatory credits and government tax breaks has been key contributor to both, to suggest the core business of making cars is still yet to really make decent profit margins.”

Other company news

Markets will be closed for a half the day on Christmas Eve, plus the whole of Christmas Day and a Boxing Day substitute bank holiday on Monday.

While there is precious little company news in the diary, the mercurial year 2020 is still likely to throw up more surprises.

M&A deals could be one source of news, with administrators of Debenhams and Arcadia both looking for buyers for all or parts of this stricken high street pair.

Coronavirus-related developments are also likely, with various companies looking to develop vaccines, tests and PPE products.

Significant announcements expected for two weeks ending January 1:

Monday December 21: 

Economic data: US Chicago Fed national activity

Tuesday December 22: 

AGMs: Mosman Oil & Gas Ltd (LON:MSMN)

Economic data: UK GDP, US GDP

Wednesday December 23: 

AGMs: easyJet PLC (LON:EZJ), Avation PLC (LON:AVAP)

Thursday December 24: 

Christmas Eve, market half-day

FTSE 100 ex-dividends to knock 0.1 points off the index: Halma PLC (LON:HLMA

Friday December 25: 

Christmas Day, market closed

Monday December 28:

Bank holiday, market closed

Tuesday December 29:

Finals: Fulham Shore PLC (LON:FUL)

AGMs: SkinBioTherapeutics PLC (LON:SBTX)

Economic data: US consumer confidence

Wednesday December 30:

AGMs: Eco Atlantic Oil & Gas Ltd (LON:ECO), Plexus Holdings Plc (LON:POS)

Economic data: US Chicago PMI

Thursday December 31:

New year’s eve, market half day

AGMs: Iconic Labs PLC (LON:ICON)

Friday January 1:

New year’s day, market closed

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