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Climate change stocks to watch ahead of COP26

What do Mumbai, Miami and the Maldives have in common? Due to rising sea levels, they are all at serious risk of being completely submerged in the coming decades. 

 

This Sunday 31 October, Glasgow will host the 2021 United Nations Climate Change Conference, also known as COP26.

 

As more people shift to more sustainability-conscious lifestyles, the pressure is mounting on political leaders to take immediate action. 

 

The growing interest in climate change has also trickled into the trading sphere, namely in the form of climate change and green energy stocks. These stocks might be challenging to trade, however, since the future trend is towards a more sustainable and greener world, now is the time to build momentum and get to know such green assets.

Paint your portfolio green with renewable energy stocks

Renewable energy (biomass, hydropower, wind energy, solar energy and geothermal power) and waste management are the primary green investment sectors. 

 

States and industries all over the world pursue decarbonisation plans while demand for clean energy increases. In the United States, renewable energy firms are also set to benefit from the Biden administration’s clean energy plan. 

 

Investments in clean energy confirm that the renewable energy industry is growing at a faster rate. However, because the market is still growing, the high competition is causing drastic swings in prices. 

 

Tesla [TSLA.O: NAS] is a game-changer when it comes to clean energy and innovation. Apart from being a prominent player in the automotive industry, Tesla has expanded its activities into renewable energy generation and storage solutions. The company has become the first clean energy company to attain a market valuation of $1 trillion.

 

Following a recent shift towards residential solar power, SunPower Corp [SPWR.O: NYS] is now leading the market in solar energy stocks. Wall Street is beginning to warm up to the critical solar sector as a whole, lifted by the green wave.

 

Another well-known company in the renewable energy industry is Nextera Energy Inc [NEE.N: NYS]. NextEra is the largest electric utility holding company by market capitalisation. It’s also the largest in the US in terms of retail electricity produced and sold with about 58 GW of generating capacity. What’s more, NextEra is the world’s largest producer of wind and solar energy.

 

If you want to go green with your portfolio, why not try trading climate change stock CFDs? Check out our product page to find all the mentioned companies and more!

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The Halloween effect – Is your portfolio spooky enough?

When I first heard of the ‘Halloween effect’ in a trading context, I dreamt up day traders to trade spider cookies for doughnut hole eyeballs and mummy pretzels on the trading floor. 

 

Sadly, the Halloween effect is not actually as delicious, but it’s still worth getting to know! The Halloween effect is a market-timing strategy, which various industry experts have thoroughly studied. 

 

The Halloween effect comes hand-in-hand with the old Wall Street adage, “Sell in May and go away”.

 

Sven Bouman and Ben Jacobsen were the first to study and document a robust seasonal effect on returns of stocks and indices during the November to April half-period. After examining data from global stock markets, they found that stocks offer better returns during this ‘winter’ period. 

 

Since then, any further studies have just reaffirmed their initial argument, i.e. the persistent effect of this seasonal anomaly across most stock markets. 

The Halloween effect - Is your portfolio spooky enough?

“Sell in May and go away.”

While researchers identified this significant seasonality to stock markets, they failed to explain what causes the Halloween indicator. 

 

Returns in November through April, on average, are significantly higher (5-10%) than those in May through October. But why do markets tend to perform better in the November to April months? 

 

Some experts indicate the impact of summer holidays on market liquidity. Others suggest that this phenomenon can relate to the negative average returns during the ‘summer period’ rather than the superior performance of markets during the winter period. 

 

Is the Halloween mystery spirit behind this consistent and persistent market-timing strategy? No one really knows.

Halloween stock market lingo

Do you know that the said Halloween spirit is all around Wall Street all year long? It lives in the Wall Street lingo!

 

We’ll share with you two of the spookiest terms used in stock market trading to add to your trading jargon, along with the Halloween effect. 

 

Dead cat bounce: Unlike the bad luck accompanying a black cat, it might mean something good when you encounter a dead cat bounce. A dead cat bounce in stocks means a momentary, brief rise in a declining stock or index price. 

 

Witching Hours: Double, triple or quadruple witching happens when markets collide and cause heavy trading volumes. Four times a year, groups of financial contracts expire on the same day and the same time. Witching happens in the final trading hour of stock market sessions on the third Friday of March, June, September and December.   

 

Trick or treat? If you are more into treats, Eurotrader offers more than 2,000+ instruments for you to eat (boo haha, sorry) trade as CFDs.

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Eurotrader Group announces the launch of Eurocapital

Eurotrader Group is branching into multi-asset liquidity provision with the launch of Eurocapital, its new institutional arm.

 

October 2021, London: Eurotrader Group has announced the launch of Eurocapital, an institutional offering that is also the Group’s debut into multi-asset liquidity provision. 

 

Eurocapital is a Prime of Prime liquidity provider that delivers highly bespoke full-circle solutions and secure offerings, with products spanning forex, equities, CFDs and futures. With decades of expertise, the Eurocapital team draws on its experience and relationships to give clients access to Tier 1 liquidity, top-of-book prices and exceptional fill rates.

 

With a rich banking heritage and a strong institutional network, the firm is equipped to construct bespoke prices based on Tier 1 bank relationships and Eurocapital’s own liquidity, ultimately providing minimal market impact solutions to its clients.

 

Bolstered by superior technology, Eurocapital’s offering is also complemented by ultra-low latency and uninterrupted trading flow, ensuring maximum efficiency and fast execution. The firm also has a network of third-party distribution hubs and co-located API connections that together form a robust international infrastructure and seamless connectivity.

 

Eurocapital is also integrated with a range of professional trading platforms and technologies, including Bloomberg, MetaTrader 4, MetaTrader 5, CQG, SS&C Eze and Trading Technologies.

 

Commenting on the launch, Matthew Kent, Director Institutional Sales, said:

 

“Our foray into institutional and professional services marks a very exciting time for Eurotrader Group. This new endeavour is a direct response to evolving market needs, which largely centre around the demand for increased flexibility and individualised solutions. Eurocapital is committed to and equipped for raising the bar of flexibility, customisation and excellence beyond what is standard today.”

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Blog

Facebook’s sell-off – A series of unfortunate events

“Hello literally everyone”, Twitter joked about the Facebook (FB) outage on Monday. For other social media, Facebook’s loss turned into a gain. During the outage, many users turned to Twitter to share memes and jokes about the six-hour global blackout. 

 

On Twitter, the hashtags #facebookdown, #instagramdown, and #whatsappdown were trending.

 

Since then, Facebook is undergoing its worst sell-off of the year following its worst-ever blackout (which took down everything from WhatsApp to Instagram) since 2008. It was so significant that the situation urged a public excuse from Chief Executive Officer Mark Zuckerberg.

 

The social media giant’s stock suffered additional pressure after a whistleblower and former FB employee charged the company with “prioritising their own astronomical profits before people.”

 

With so much negative news swirling around it, FB stock has plunged. 

 

This begs the question, how does social media affect markets?

 

People turn to social media, whether it is for social networking, news or business. Therefore, there is a growing monetisable market there. 

 

Social media benefits from digitalisation and growing online advertising, so they grow increasingly relevant. As a result, the industry outlook is very positive. 

 

At the same time, social media has become hugely important in stock trading. When social media make headlines, the relative stocks are highly affected. For instance, negative news back-to-back has been enough to send the Facebook stock tumbling.

Facebook’s sell-off - A series of unfortunate events

‘Facebook was down; Apologies to your WiFi’

As for the blackout, Facebook will likely reemphasise its importance to its users and advertisers – and in doing so, it might be a happy ever after for the tech giant.

 

But, looking at the FB stock price movement, the whistleblower story could have a great impact on Facebook’s bottom line; any discussions swirling around social media could increase the likelihood of intervention by regulators.

 

What’s more, the mounting regulatory examination could also impact the stock negatively.

 

Social media aside, however, Facebook is also a leader in VR. Considering its growth potential, it’s not surprising that many investors are shrugging off Facebook’s recent challenges. 

 

On top of that, while public sentiment has turned against Facebook in recent years, Wall Street has continued to reward its money-making talent.

 

In the meantime, why not take the opportunity to go long or short with a Facebook stock CFD? You will find FB among other social media and tech stocks (and 2,000+ instruments) offered by Eurotrader as CFDs.

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Blog

Are FAANG stocks getting old?

Whisky, cheese and pickles only get better with age, but does the same apply to FAANG stocks? In other words, are FAANG stocks getting old, and do we need a ‘new FAANG’?

 

If the term ‘FAANG’ means little more than vampire teeth to you, let’s get you up to speed: FAANG is an acronym for the most widely known tech stocks, which are Facebook, Amazon, Apple, Netflix and Alphabet (formerly known as Google). 

 

Other variations of FAANG include ‘FANG’ (someone ate the Apple) or FAAMG (Goldman Sachs’ version swaps Netflix for Microsoft). 

 

No matter what the acronym is, such mega-cap tech stocks always exhibit growth, as technology is a growth sector anyway. In turn, for many traders and investors, FAANG is like the ex-partner they go back to when they need comfort and familiarity after a new relationship doesn’t work out. 

 

The said giant tech companies have achieved year-on-year revenue increases and share price appreciation. What’s more, they highly affect the stock market thanks to their weighting in the S&P 500, as they make up approximately 15% of the index’s total market cap.

 

Considering the above, you might think of these stocks as ‘classics’. But can you even get classic stocks? We’re sorry to break it to you, but the answer is no. There’s no such thing as ‘classic stocks’, as the stock market is very volatile. Even safe havens turn out to be not so safe from time to time. 

 

Even if the FAANG five continues to grow, some market experts have already found the ‘new FAANG’: TAND (Tesla, Activision, Nvidia and Disney).

Are FAANG stocks getting old?

Shall I wave goodbye to FAANG?

Things change quickly in the normal world, and changes happen even faster in the business world. Ten years ago, Facebook wasn’t even a public company; we just knew it as a social media site for poking our friends and tending to our farms. And Netflix, back then, was still a DVD-by-mail outfit without any original content.

 

Such companies always look to remain relevant and invest in new technology. However, even highly successful companies and products don’t stay at the top forever. As consumers’ needs change, those creating such needs or finding solutions to problems are in the lead.   

 

For instance, Tesla is still the leader in electric vehicles in a world trending toward lowering carbon emissions. Apple has plans for the iCar – a self-driving or electric car –, but as the details are scarce, it remains unknown if it can compete with Tesla on the field. 

 

It seems that the most remarkable period of growth of FAANG is already behind us, even though they provide consistent growth at scale. But don’t worry: there is still a long way to go before we need to wave goodbye to them for good.

 

In the meanwhile, why not take the opportunity to speculate on their price? Eurotrader offers FAANG stocks among 2,000+ other instruments to trade as CFDs.