US Market Open: Will Republicans turn on Trump?

• US markets are called to open broadly flat today, as Democrats push ahead with plans to impeach president Trump for a second time.
• European markets are in slightly negative territory at midday, as the president of the ECB stuck to the central bank’s forecasts for the eurozone’s recovery this year.
• In forex, EUR/GBP has sank to its lowest level since November.
• In commodities, oil has taken a break from its recent rally.

US markets hold steady

The S&P 500 is called to open at 3797.4 today, broadly flat after ending yesterday at 3800.9.

The Dow Jones is set to open a smidgen lower at 31060.0 from Tuesday’s closing price of 31076.5.

Start trading the opportunities with indices today.

Democrats seek to impeach Trump

The House of Representatives will today vote on an article of impeachment against president Donald Trump on the basis he incited insurrection during a speech before rioters stormed the US Capitol building last week.

The Democrats are pushing ahead with impeachment proceedings after vice-president Mike Pence refused to oust Trump using the 25^th amendment, stating it was not in the best interest of the country.

Notably, a group of at least five Republicans have said they will support the Democrats and vote in favour of impeaching the president, according to Reuters.  

If it successfully passes the House then it will move onto the Senate which, for now, is still under Republican control. That would mean 16 or 17 Republican Senators would have to turn on Trump for it to pass.

It is not clear how effective impeachment proceedings will be in removing Trump from office considering he is due to leave the White House on January 20, but Democrats have said he needs to be held to account and are hoping to deal a blow to any thoughts Trump has about re-running for president in 2024.

Gary Gensler for SEC chair?

Reports have surfaced that Joe Biden will appoint Gary Gensler as the new chair of the Securities & Exchange Commission after he becomes president.

Gensler was previously the boss of the Commodity Futures Trading Commission between 2009 and 2014 and is reported to have advised Biden on the financial industry during the transition.

Reports suggest Gensler could tighten regulations after rules were eased under president Trump’s watch, including on how companies report and manage environmental obligations and social matters.

European markets hold steady as FTSE 100 falls

The Euro STOXX Index traded slightly lower at midday at 3608.5 from its last closing price of 3611.4.

France’s CAC 40 was also holding steady at 5656.3 after ending yesterday at 5657.5.

Germany’s DAX was trading slightly lower at midday at 13913.0 from 13923.4.

Meanwhile, over the Channel, the FTSE 100 was down 0.3% at 6746.3 compared to 6765.4 at the end of play yesterday.

City Index analyst Fiona Cincotta has a technical look at the FTSE 100 following a slew of updates from UK stocks today.

In today’s Top UK Stocks to Watch, Just Eat shares slide as it prioritises growth over profits, Persimmon sells fewer houses at higher prices, Marshalls reinstates dividends after a strong finish to 2020, and Spectris says it will hit the top end of expectations.

ECB president Lagarde sticks by economic growth forecasts

Christine Lagarde, the president of the European Central Bank, said the eurozone economy should still rebound this year despite a slower than expected start to the rollout of vaccines within the bloc.

The recent surge in cases, discovery of new variants and a ‘laborious’ start to the vaccination programme have all cast doubt over the bloc’s ability to recover this year. However, Lagarde said she still believed the region could recover so long as restrictions began to be eased in the second quarter of the year.

She reiterated the ECB’s forecast that the bloc would post economic growth of 3.9% this year, stating it was ‘clearly plausible’. However, Lagarde warned that if the rollout of vaccines slows down or if restrictions are needed for longer then its forecasts could be impacted.

EU warns British banks about ‘questionable practices’ post-Brexit

The European Securities & Markets Authority warned that some banks outside of the bloc are trying to offer investment services to customers in the EU, potentially breaking new post-Brexit terms.

‘With the end of the UK transition period on 31 December 2020, some questionable practices by firms around reverse solicitation, where the product or service is marketed at the client’s own exclusive initiative, have emerged’, the regulator said.

Germany’s lockdown to extend into February

Germany’s health minister Jens Spahn has said some lockdown restrictions will have to be extended into February.

The German cabinet approved an extension to existing lockdown rules until the end of January earlier today, but Spahn said it was ‘already evident’ that it will ‘not be possible to loosen all restrictions on February 1.’

He said it would take two to three months before the vaccination programme began to have an effect, as the country reported 19,600 cases and 1,060 deaths in its latest daily figures.

Separately, the Netherlands said it would also extend lockdown for another three weeks to keep schools and shops closed.

US threatens European companies working on Nord Stream 2

The US has threatened to place sanctions on European companies that are helping build Russia’s Nord Stream 2 gas pipeline. The pipeline will stretch from Germany to Russia and the US is unhappy that it will deprive Ukraine from transit fees and increase Russia’s influence in Europe.

The US government’s statement said it was urging any companies working on the project to pull out ‘before it’s too late’.

Although the current US government will be heading out the door on January 20, president-elect Joe Biden also opposed the project when he was vice-president under Barack Obama.

European stock news: Carrefour and Telefonica rise on deal-making news

Among the risers in Europe today was French supermarket Carrefour and Spanish telecoms giant Telefonica.

Carrefour has been approached by Canadian convenience store firm Alimentation Couche-Tard. It would combine the supermarket chain that has extensive operations in Europe with Couche-Tard’s swathe of gas stations and stores in North America.

Meanwhile, Telefonica shares also soared after it said it intends to sell its towers business in Europe and Latin America to American Tower for EUR7.7 billion, according to reports from Bloomberg.

Forex: EUR/GBP hits lowest level since November

EUR/GBP was trading 0.4% lower at midday at 0.88976 – its lowest level since November 25 - from 0.89341 at yesterday’s close.

GBP/USD was holding steady at 1.36698 from 1.36637 at yesterday’s close.

Meanwhile, EUR/USD traded slightly lower at 1.21629 from 1.21511 at the end of play on Tuesday.

Start trading the opportunities in the forex market today.

Commodities: Oil takes a breather

Brent took a breather from the recent rally and traded at $56.66 a barrel at midday, broadly flat from $56.70 yesterday, while WTI managed to edge slightly higher to $53.45 from $53.32.

Oil prices have gained ground in five out of the last five trading sessions. The latest data from the American Petroleum Institute on US stockpiles showed a 5.8 million barrel decline last week, a much bigger fall than the 2.3 million drop expected by markets. That has helped support prices following the production cuts announced by Saudi Arabia last week and a note from Goldman Sachs yesterday that said oil could hit $65 per barrel by the middle of 2021.

The second set of weekly data on inventories from the Energy Information Administration will be published today at 1530 GMT.

Start trading the volatility in oil prices today.

Gold was trading broadly flat at midday at $1854 an ounce after ending yesterday’s session at $1855.

Start trading gold and other precious metals today.

Market-moving events in the economic calendar

Today in the economic calendar there is US CPI numbers due at 1330 GMT. The Federal Reserve’s Lael Brainard gives a speech at 1800 GMT, with Richard Clarida to follow at 2000 GMT. The Fed’s beige book will be released in-between at 1900 GMT, concurring with the monthly budget statement from the Financial Management Service.

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.