US Market Open: Fresh opening highs despite stimulus delays
Joshua Warner December 30, 2020 12:15 PM
US markets are set to open at fresh highs today despite the Senate’s delay in finalising the stimulus bill, while European indices were trading higher after the UK approved a new vaccine developed by AstraZeneca and Oxford university.
US markets to open at fresh highs
The Senate continues to argue over the new stimulus bill and how to respond to president Donald Trump’s decision to veto the defence bill.
Trump approved the stimulus bill to avoid a partial government shutdown late last week despite describing it as a ‘disgrace’. He argued that direct payments to Americans of $600 should be raised to $2,000 and the Democrats agree, but some of Trump’s fellow Republicans are against the idea because it would cost too much.
Yesterday, lead Republican and leader of the Senate Mitch McConnell attached the demand for larger cheques to other measures that the Democrats do not support. These are provisions that would scrap legal protection for Big Tech companies and a study into how secure the US election system is. That puts Democrats in a difficult position of deciding if it wants to approve all three measures or abandon them all, and casts severe doubt over whether an individual vote on stimulus cheques will happen.
McConnell is urging the Senate to push ahead with plans to override the president’s decision to veto a $740 billion defence bill, but Democrats want the stimulus bill tied-up first.
European indices push higher on vaccine news
European markets were being supported by news that the UK has become the first country to approve a vaccine developed by AstraZeneca and Oxford university. Germany’s health minister Jens Spahn urged for European regulators to conduct a ‘quick and thorough examination’ of the AstraZeneca jab. The EU started to vaccinate citizens this week using the Pfizer-BioNTech jab.
The Euro STOXX Index traded 0.4% higher at 3581.5 at midday from 3568.7 at the end of play yesterday.
Meanwhile, over the Channel, the FTSE 100 was up 0.2% at 6602.3 at midday after closing at 6589.9 yesterday.
The UK medicines regulator this morning approved the coronavirus vaccine developed by AstraZeneca and Oxford university. It is the second vaccine to be approved by the UK after the Pfizer-BioNTech was given the green light earlier this year.
The vaccine is expected to offer major advantages due to its low cost and because it can be stored and transported easier than the Pfizer-BioNTech one, which needs to be stored at very low temperatures. The UK has bought 100 million doses of the vaccine and the jab should start to be rolled-out early in 2021.
City Index analyst Nicolas Suiffet takes a look at the AstraZeneca share price and how a technical rebound could be on the cards.
The approval comes on the same day the government will unveil its latest review into the tiered restrictions in place to stop the spread of coronavirus. UK cases have climbed to new record highs and there are now more people being treated for the virus in hospital than ever before.
Parliament is being recalled today to allow MPs to vote on the Brexit deal, formally named the EU (future relationship) Bill. Politicians have been given little time to evaluate the deal that was announced late on December 24, but it is widely expected to be approved thanks to the Conservative government’s large majority and the opposition Labour party’s support.
The bill will also be pushed through the House of Lords today to ensure it is approved ahead of the transition period ending tomorrow.
UK prime minister Boris Johnson is expected to say in a speech today ahead of the vote that the deal allows the country to take control of its laws but also to maintain a close friendship with the bloc.
On the other side of the Channel, EU ambassadors have already provisionally approved the deal and will formally ratify it sometime in January.
Forex: Dollar softens to new lows
EUR/USD was trading 0.3% higher at midday at 1.22726 from 1.22414, having briefly touched its highest level since April 2018 in earlier trade. City Index analyst Fiona Cincotta has a look at the technical outlook for EUR/USD.
Commodities: WTI in focus ahead of US data
WTI will be in focus later today when the EIA crude oil stocks change is released at 1530 GMT, providing insight into how demand is holding up in the US. There is also the Baker Hughes US oil rig count at 1800 GMT, which will show how drilling activity is faring.
Market-moving events in the economic calendar
The headline event in the economic calendar is the US Chicago PMI at 1445 GMT and pending home sales at 1500 GMT. City Index analyst Christophe Chevalier explains how the PMI and wholesale inventories data could impact the dollar index.
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