US Market Open: US-China tension, fiscal stimulus in focus

What to expect from stocks, commodities and the forex market ahead of the US market open today and a look at how European markets are performing.

Charts (5)

US stocks are set to open lower on Monday after rallying last week.

Relations between the US and China have come firmly back into frame after it was reported that the US is preparing to sanction a string of Chinese officials over the recent disqualification of Hong Kong legislators. It is seen as a disruptive move by outgoing president Donald Trump, who seems committed to placing pressure on China in his final weeks in office – however, China has warned it could respond with countermeasures if the US continues to head down the ‘wrong path’.

Markets are also keeping an eye on whether new fiscal stimulus will be introduced in order to prop-up the economy that has been hit by the coronavirus pandemic. The FT reported that a bipartisan group of US senators could table legislation for an additional $908 billion stimulus package to be introduced this week, although it is not clear whether there is enough support to push it through for a vote.

US Indices set to open lower after rallying last week

The S&P 500 is called to open 0.1% lower at 3686.9, having ended last week at 3692.3.

The Dow Jones is set to open 0.2% lower at 30098.0 after closing at 30172.0 on Friday.

Both indices have rallied recently and traded higher at the close of last week than before the coronavirus pandemic brought markets tumbling down in March. The rising tensions between the US and China has weighed on performance.

CISCO to buy IMImobile for $730 million

CISCO has agreed to buy London-listed IMImobile, which makes communications software, for 595 pence per share in a cash deal worth $730 million, including debt.

AirBnB has higher hopes for IPO price

AirBnB is reportedly raising its IPO target price to between $56 to $60 per share, according to Reuters, up from the previous target range of $44 to $50. That could value the business up to $41.8 billion, considerably higher than the $18 billion valuation it touted in April. The company is expected to list before the end of the year.

European stocks fall on Brexit uncertainty

Brexit remains in the spotlight, with UK prime minister Boris Johnson and European Commission president Ursala von der Leyen due to speak tonight about whether enough progress has been made by negotiators to strike a last-ditch trade deal.

The two sides have reached an agreement on most matters, but significant sticking points remain. They include disagreements about fishing rights, how the deal is governed, and how a ‘level playing field’ can be maintained. 

The Euro STOXX Index is down 0.3% at 3522.5 at midday. 

Germany’s DAX is down 0.1% at 13257.0 at midday. German industrial production numbers were out this morning, showing 3.2% growth between September and October and marking the sixth consecutive month of growth. However, manufacturing production remains below its pre-pandemic levels.

France’s CAC 40 is down 0.9% at 5566.3.

Moncler to buy Stone Island for EUR1.15 billion

Italian luxury brand Moncler has agreed to buy rival Stone Island in a cash and shares deal valued at EUR1.15 billion. CEO Remo Ruffini said the brands were coming together ‘at a challenging moment both for Italy and the world, when everything seems uncertain and unpredictable’.

SocGen to merge retail banks to save EUR450 million in costs

French bank Societe Generale said it will merge its main retail bank with one held by its subsidiary in order to cut costs by EUR350 million by 2024 and EUR450 million by 2025. The move will shut around 600 branches.

Deutsche Bank raises profitability target for Asia

Germany’s Deutsche Bank has said it is aiming to deliver a return on tangible equity (RoTE) of 15% from its core bank business in Asia by 2022, compared to 10% this year. This is because of a stronger economic recovery in Asia, as well as growing money flows into the region. 

FTSE 100 climbs higher as pound takes a battering

Meanwhile, over the Channel, the FTSE 100 is up 0.6% at 6585.8 at midday, partly boosted by the pound weakening against both the euro and the dollar on Monday.  

The Hut Group upgrades outlook for 2020

The Hut Group said sales beat expectations in all divisions during October and November, prompting it to raise its guidance for the full year. The tech-led beauty retailer said it now expects annual revenue to be between £1.57 billion to £1.60 billion, between 38% to 40% higher than the previous year. Beforehand, the company was targeting annual growth of 30% to 33%.

Will Frasers Group save Debenhams?

Frasers Group, the owner of Sports Direct, Evans Cycles and other high street brands, has confirmed it is in talks with the administrators of Debenhams. JD Sports was considering a move for the ailing department store but pulled out last week.

‘Whilst Frasers Group hopes that a rescue package can be put in place and jobs saved, time is short and the position is further complicated by the recent administration of the Arcadia Group, Debenhams' biggest concession holder. There is no certainty that any transaction will take place, particularly if discussions cannot be concluded swiftly,’ the company said.

Games Workshop says sales and profits surge  

Games Workshop, which makes and sells miniature figurines used in wargames, said sales soared to £185 million in the six months to November 29 from £148 million the year before. Asa result, pretax profit is expected to surge to at least £90 million compared to just £59 million. The firm also declared a 60p dividend to distribute surplus cash. Its interim results will be released on January 12.


It has been a tough day for sterling as it succumbs to fears over a no-deal Brexit.

GBP/USD is currently sits at 1.32574 – 1.3% lower than at the end of play on Friday. Cable ended last week at 1.34378, when it briefly hit its highest level since June 2018 before losing ground on Monday as Brexit fears take hold.

EUR/GBP traded at 0.91301 at midday, rallying 1.1% from 0.9025 at the close Friday.

Find out more about trading forex here.


Gold is trading at $1831.2 per ounce at midday, down 0.3% from $1,837.2 at the close of trade on Friday.

Oil prices have also fallen on Monday after being buoyed last week by an agreement between OPEC and Russia to address fears of over-supply. Brent has lost 0.4% since the close on Friday and currently trades at $48.78 per barrel, while WTI has shed 0.5% to trade at $45.87.

Find out more about trading the volatility in oil here.

Economic Calendar:

There is a light economic calendar for the rest of the day. The biggest event is the release of Japan’s GDP later tonight.

Time (GMT)





Ivey Purchasing Managers Index for Nov



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BRC Like-for-Like Retail Sales for Nov (YoY)



Labor Cash Earnings for Oct (YoY)



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Bank Lending for Nov (YoY)



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Trade Balance for Oct - BOP Basis



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