US Market Open SP to open at record high

• US markets are eyeing record highs again as hopes build that a new fiscal stimulus package can be agreed today.
• European indices were trading higher at midday as the EU plans to start vaccinating people before the end of the year, while the FTSE 100 was held back by a stronger pound.
• The Bank of England left interest rates and its stimulus programme unchanged on Thursday as it waits to see how Brexit talks progress.
• Sterling rallied above 1.36 against the dollar for the first time since May 2018, while the euro has also continued to climb against the greenback.
• Oil prices rose to new highs this morning before giving back most of their gains, while gold has also edged up to a new four-week record.

US indices to open at new record highs

The S&P 500 is called to open 0.5% higher today at 3720.7 from 3701.2 at yesterday’s close, marking a new all-time high for the index.

The Dow Jones is set to open 0.4% higher at 30282.0 from 30166.0 at the end of play on Wednesday, marking its highest-ever opening price and only a fraction below its record high.

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US stimulus package could be agreed today

A new fiscal stimulus package could be agreed on Thursday, as negotiations between lead Republicans and Democrats continued yesterday. Reports suggest the two sides are nearing an agreement on a $900 package. That is larger than a $748 billion package that was gaining traction earlier this week as both sides have added new cash giveaways for those hard-hit by the pandemic. The specific amount to be given to individuals is still being debated.

Time to agree is running out as any relief package would have to be attached to a much larger spending bill that must be passed by Friday to avoid a government shutdown. 

The lack of clarity over a new stimulus package was one of the reasons why the Fed decided to keep injecting money into the markets and hold steady on its bond purchasing programme. City Index analyst Nicolas Suiffet writes this morning about the Fed’s decision to leave interest rates unchanged last night at its monetary policy meeting.

US airlines on brink of new bailout package

US airlines are expected to secure a new four-month extension to a government-assistance programme that is set to inject another $17 billion into the industry, according to Reuters. It would form part of the wider coronavirus relief package being debated by politicians.

EU buys more doses of Pfizer vaccine

The EU is purchasing 100 million more doses of the vaccine developed by Pfizer and BioNTech. That will expand the existing deal for 200 million doses agreed earlier this year.

Meanwhile, Germany’s health minister said EU member states will start to vaccinate citizens on December 27, assuming the European Medicines Agency gives the Pfizer-BioNTech vaccine the all clear on December 23.

It was also revealed on Thursday that France’s president Emmanuel Macron has contracted COVID-19, forcing him to isolate for the next week and cancel international trips, including a scheduled trip to Lebanon.  

European indices push higher as FTSE lags behind

European indices were also largely trading higher at midday on Thursday. Brexit negotiations are thought to finally be progressing and hopes of a deal are alive, with both sides striking a positive tone as the clock continues to tick down.

The Euro STOXX Index traded 0.4% higher at 3562.0 at midday from 3548.2 at the end of play on Wednesday.

France’s CAC 40 was up 0.3% at 5563.5 from 5544.8, while Germany’s DAX had surged 0.6% to 13665.0 from 13586.0. The index is now at its highest level since February 2020, representing the recovery of nearly all of its pandemic-induced losses this year.

Meanwhile, over the Channel, the FTSE 100 was underperforming yet again, partly thanks to the pound continuing to gain ground against both the euro and the dollar. The index traded 0.1% lower at 6567.5 at midday compared to its last closing price of 6574.3.

Bank of England holds rates as expected

The Bank of England left interest rates unchanged at 0.1% on Thursday as it kicked-off its last monetary policy committee (MPC) of the year. The members of the MPC voted unanimously to leave rates alone and said they would maintain the current pace of buying government bonds.

The response was expected by markets as the central bank waits to see what the outcome of Brexit talks will be.

Forex: Sterling and euro continue rally against dollar

GBP/USD traded at 1.36214 at midday, up 0.8% from 1.35093 at the close of trade on Wednesday. It is the first time the pound has broken the 1.36 mark since May 2018.

EUR/USD also rallied 0.3% to 1.22375 from 1.21996, hitting its highest level since April 2018.

EUR/GBP continued to fall further as the pound raises on the hopes of a Brexit deal, trading 0.5% lower at 0.89841 at midday after closing at 0.90306 yesterday, breaching below the 0.9 threshold.

Start trading the opportunities in the forex market today.

The most drastic movements in the currency markets in early afternoon trade, according to data from Reuters, are as follows:

Commodities: Brent touches new high before losing ground

Oil prices have continued to push higher and continue to trade at their highest level since March, with Brent briefly touching $51.86 before losing some ground. The anticipation that the EU will be the latest major economy to approve a vaccine and have also been bolstered by a weaker dollar.

Brent traded at $51.17 at midday, only slightly higher than $51.07 at the Wednesday close, while WTI had edged upwards to $48.11 from $48.01.

Start trading the volatility in oil prices today.

Goldalso pushed higher to hit its highest level in almost four weeks, trading at $1877 from $1864 at the end of play yesterday.

Start trading gold and other precious metals today.  

Market-moving events in the economic calendar

The economic calendar this afternoon starts with US housing starts, building permits, and jobless claims at 1330 GMT. There is Australia’s trade balance at 2145 GMT and Japan’s CPI numbers at 2330 GMT.

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.