European Market Open: Flat start as France reopens border with UK
Joshua Warner December 23, 2020 3:07 PM
Markets are to open broadly level this morning as the France-UK border reopens after being shut because of fears over a new strain of the coronavirus.
- European markets are set to open broadly flat this morning while the FTSE 100 is called to open lower.
- The France-UK border is being reopened today after being closed for 48 hours over fears about a new strain of the virus, while Brexit talks rumble on.
- In commodities, oil prices continued to slide to hit their lowest level in two weeks.
FTSE 100 to open lower
European indices to open broadly flat
The Euro STOXX Index is called to open broadly flat at 3497.5 from 3496.7 at the close on Tuesday.
Germany’s DAX is set to open a smidgen higher at 13415.0 from 13405.6, while France’s CAC 40 is set to open slightly lower at 5469.6 from 5472.3.
UK prime minister Boris Johnson and European Commission president Ursala von der Leyen have spoken over the phone in an effort to break the Brexit deadlock, with just 8 days to go until December 31.
Talks could continue beyond Christmas, but both sides are reported to be trying to strike an agreement by the end of today to ensure there is time for both sides to ratify any deal before the end of the year.
Michel Barnier, the EU’s chief negotiator, told ambassadors of member states yesterday that the latest offer made by the UK on fisheries was unacceptable.
France to reopen border with UK
The border between France and the UK is set to be gradually reopened today after being shut to prevent a new strain of the coronavirus found in the UK spreading further afield. Hauliers and EU citizens trying to get home for Christmas will be able to start crossing the border so long as they have a negative COVID-19 test within 72 hours of travelling.
That follows the European Commission’s advice to EU countries to lift the travel ban on the UK but insist people have negative tests or quarantine for 10 days, although individual states still have the final say on their own border restrictions.
UK business activity takes another hit during lockdown
Data released early this morning by the Confederation of British Industry showed the balance of companies reporting growth in the three months to December slipped to -21 from -16 a month earlier, as new lockdown restrictions took its toll. Still, it remains well above the -71 reported at the depth of the crisis in June.
Separate figures from the Society of Motor Manufacturers and Traders (SMMT) said British car production was 1.4% lower in December compared to November. While this is a mild month-on-month decline, production year-to-date is down a staggering 31%.
President Trump threatens not to sign new stimulus package
US president Donald Trump has stunned markets by threatening not to sign an $892 billion coronavirus relief package that was agreed by lawmakers earlier this week. The package is attached to a wider bill designed to supply more funding to federal governments before existing funds run out on December 28.
Trump’s main problem with the bill is the amount to be paid directly to American adults. The package has agreed on payments of $600 per adult, but Trump is insisting on $2,000. However, Democrats appear open to the idea considering they were pushing for more money for citizens during negotiations in the first place.
If the bill needs to be amended then it will need to be passed by the House and the Senate again, which makes for a tight timeframe if the country is to avoid a full or partial government shutdown when existing money runs out.
Cairn Energy wins tax dispute with Indian government
Cairn Energy has won an international arbitration case against the Indian government over a tax dispute, according to reports from Reuters. The dispute has gone on since 2015, when the government claimed the company owed $1.6 billion in taxes from its Indian operations.
Meanwhile, as Brexit talks continue, EUR/GBP traded at 0.90863, down 0.2% after ending Tuesday at 0.91039.
Commodities: Oil prices hit two-week low
Oil prices have continued to slide as markets fear surging coronavirus cases and a new strain could hamper demand for oil going forward.
Brent traded at $49.53 in early trade, edging down to a two-week low after ending yesterday’s session at $49.82, while WTI also fell to $46.32 from $46.79.
Market-moving events in the economic calendar
The US takes centre stage in the economic calendar today, with core personal consumption, personal spending, initial jobless claims, and durable goods orders at 1330 GMT, followed by Michigan consumer sentiment and new home sales at 1500 GMT.
There is also Canada’s GDP numbers at 1330 GMT and Switzerland’s SNB quarterly bulletin at 1400 GMT.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.