European Market Open: Biden unveils $1.9 trillion stimulus

European markets are called to open sharply lower this morning, as investors digest what a new stimulus package unveiled by US president-elect Joe Biden means for markets.

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  • US president-elect Joe Biden has proposed a $1.9 trillion stimulus package as he prepares to enter the White House next week.
  • In Europe, the UK imposes a travel ban on South America, France introduces a new stricter curfew, while Germany’s most popular political party prepares to hold elections over the weekend.
  • In forex, cable dips after hitting its highest level since April 2018 yesterday, while EUR/GBP rebounds after hitting its lowest level since late November on Thursday.
  • In commodities, oil prices have dipped following the recent rally.

FTSE 100 to open lower

The FTSE 100 is set to open 0.4% lower this morning at 6764.8 after ending Thursday at 6794.1.

European markets to see sharp fall upon opening

The Euro STOXX Index is to open at 3612.0 this morning, down 0.7% from 3635.9 at the last close.

France’s CAC 40 is called to open 0.6% lower at 5637.2 after ending Thursday’s session at 5674.0.

Germany’s DAX is set to follow 0.6% lower at 13883.5 after closing at 13969.2 yesterday.

Start trading the opportunities with indices today.

Biden unveils $1.9 trillion stimulus plan

US president-elect Joe Biden has proposed a $1.9 trillion stimulus plan to help the ailing US economy recover from the pandemic as he prepares to take office next week.

The package includes over $1 trillion for citizens, including $1400 cheques for all Americans, as well as $415 billion to step up the fight against the virus and bolster vaccination programmes, and $440 billion for small businesses.

Biden said the rollout of vaccines in the US had been ‘a dismal failure’ so far as he aims to vaccinate 100 million people within his first 100 days in office. The new funds will be used to expand testing, hire new public health workers and to help schools reopen.

The unemployed would see their supplemental job benefits rise from $300 a week at present to $400 under the new stimulus plan. The $1400 cheques will be in addition to the $600 cheques that were sent out as part of the $900 billion stimulus plan approved last month.

The package will now have to face Congress. The recent wins in the Senate means the Democrats will be in charge of Congress when Biden takes office, although he is still keen to capitalise on the bipartisan mood in the house and to gain Republican support. The biggest hurdle will be convincing Republicans the huge package is necessary as many are worried about how it will impact public finances.

UK imposes South America travel ban as France introduces new curfew

The UK has imposed a travel ban on countries in South America to try to stop a new variant discovered in Brazil from spreading. Bans have also been imposed on countries with close ties to Latin America, including Portugal and Cape Verde.

French prime minister Jean Castex has said a new national curfew will come into force on Saturday. The current curfew in place comes into force at 2000 local time and lasts until 0600, but the new curfew will start at 1800. That comes as Castex said infection rates remained ‘worrying’ and at a ‘high plateau’.

The latest Reuters tally shows global coronavirus cases have risen to a total of 92.4 million, with 1.98 million deaths recorded so far.

Germany’s CDU to vote for new leader to succeed Merkel

Candidates will stand in a digital election on Saturday evening as members of the Christian Democratic Union prepare to choose who will succeed Angela Merkel as leader of Germany’s most popular political party.

There are three candidates standing – Friedrich Merz, Armin Laschet and Norbert Rottgen. Mers, regarded as more Conservative than his rivals and Merkel, is reported to be leading the polls. The winner will be the favourite to become the party’s candidate for chancellor during the Bundestag election in September, which will mark the end of Merkel’s tenure after 16 years at the top.

Forex: Cable falls from recent high

GBP/USD traded at 1.36666 in early trade this morning, down 0.2% compared to 1.36889 at the end of play yesterday when it hit its highest level since April 2018.

EUR/USD was down 0.2% this morning at 1.21347 from 1.21555 at the last close.

Meanwhile, EUR/GBP traded slightly higher this morning at 0.88821 from 0.88805 at the end of Thursday, when it hit its lowest level since November 24.

Start trading the opportunities in the forex market today.

Commodities: Oil prices fall after recent rally

Brent traded at $55.65 this morning, down 1.4% from $56.44 at the end of play yesterday, while WTI was down 1.2% at $53.09 from $53.75.

The Baker Hughes US oil rig count, which provides an insight into drilling activity, will be released at 1800 GMT.

Start trading the volatility in oil prices today.

Gold traded at $1848 this morning, up 0.1% after ending yesterday at $1846.

Start trading gold and other precious metals today.  

Market-moving events in the economic calendar

The headline event in the economic calendar today is US retail sales at 1330 GMT, when the producer price index will also be published. The Michigan consumer sentiment index will be released at 1500 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.

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