European Market Open: Brexit transition to end

European markets are set to open mixed today ahead of the Brexit transition period coming to end this evening, paving the way for the coronavirus pandemic to return to centre stage as we enter 2021.

Brexit 10

FTSE 100 to open lower

The FTSE 100 is set to open 0.1% lower at 6506.5 from 6515.6 at the end of play yesterday.

UK markets are open for a half-day and will shut at 1230 GMT.

CAC to open higher

France’s CAC 40 is called to open 0.2% higher at 5578.8 from 5568.5.

French markets are only open for a half-day today, while German markets are closed for the day.

Start trading the opportunities with indices today.

Brexit transition period to end

Four-and-a-half years after voting to leave the EU, the last stage of Brexit will finally take place at 2300 GMT tonight, when the transition period formally ends. UK politicians overwhelmingly backed the Brexit deal struck on December 24 during a vote yesterday, stamping its divorce from the EU into law. EU ambassadors have provisionally accepted the deal and the bloc intends to formally ratify it during January.

Although the deal has tried to minimise disruption, Brexit will bring about huge changes that businesses will have to adapt to. The UK is leaving the Single Market and Customs Union, and many sectors – such as financial services – remain largely uncovered by the new deal.

COVID recovery becomes central focus for 2021

The central focus for markets heading into 2021 is how economies will be able to recover from the pandemic by rolling-out vaccines and relaxing restrictions. Confidence has grown in recent months as both the UK and the EU started to vaccinate their populations, although surging cases and hospitalisations shows most countries are still not out of the woods.

The UK introduced tougher lockdown restrictions on more parts of the country yesterday, major European nations like Germany and France have also seen a recent spike in cases, while the US reported its highest-ever daily death toll yesterday.

The UK’s approval of the AstraZeneca-Oxford university vaccine – which is cheaper to produce and easier to distribute than the widely-used Pfizer-BioNTech jab – has raised hopes that life can get back to normal quicker.

City Index analyst Joe Perry has a look at what the roll-out of vaccines could mean for markets next year.

US to place new tariffs on EU goods

The US government has said it will increase tariffs on certain goods from the EU as part of the dispute over aircraft subsidies. This will include tariffs on aircraft parts and certain wines and other alcoholic spirits. The US has not said when they will be introduced but said the details would be ‘forthcoming’. The two sides have been in a dispute over how they subsidise their plane makers (Airbus in the EU and Boeing in the US) for well over a decade.

Forex: Narrow movements

GBP/USD traded at 1.36272 in early trade, slightly higher than the 1.36246 at the end of trade yesterday – when it hit its highest level since April 2018.

EUR/USD was slightly down this morning at 1.22916 from 1.22973 yesterday – when it also hit its highest level since April 2018.

Meanwhile, EUR/GBP was broadly flat at 0.90183 from 0.90263.

Start trading the opportunities in the forex market today.

Commodities: Oil prices edge higher

Brent traded at $51.60 in early trade, up from $51.48 at the close yesterday, while WTI edged higher to $48.38 from $48.34.

The EIA natural gas storage change, providing an insight into US stockpiles, is scheduled at 1700 GMT today.

Start trading the volatility in oil prices today.

Gold traded at $1888 an ounce this morning, down from $1894 at the end of play yesterday.

Start trading gold and other precious metals today.  

Market-moving events in the economic calendar

The headline event in the economic calendar today is due at 1330 GMT, when US initial and continuing jobless claims will be released.

You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.

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