US Market Open: Heading higher despite stimulus uncertainty

US markets are called to open higher despite fresh uncertainty about the latest stimulus bill.

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  • US markets are called to open higher today, shrugging off fresh uncertainty over president Trump’s threat not to approve the latest stimulus bill.
  • A string of data is due out of the US starting at 1330 GMT, including jobless claims and spending figures.
  • European indices were trading higher at midday but the FTSE 100 lagged behind thanks to a stronger pound.
  • In commodities, oil has edged back above $50 while gold has also moved higher.

US indices to open higher

The S&P 500 is called to open 0.3% higher at 3695.9 after ending yesterday’s session at 3684.7.

The Dow Jones is set to follow 0.3% higher at 30095.0 from 30010.5 at the close on Wednesday.

Start trading the opportunities with indices today.

President Trump threatens not to sign US stimulus bill

US president Donald Trump has described a new $900 billion stimulus package designed to help the coronavirus-hit economy as a ‘disgrace’, urging for it to be amended if it wants his approval.

The bill was easily approved by both the House and the Senate earlier this week after prolonged discussions. The package is attached to a wider bill designed to supply more funding to federal governments before existing funds run out on December 28.

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.

Trump is unhappy with several elements of the bill, which he did not directly negotiate, but his main problem 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.

Speaker of the House and lead Democrat Nancy Pelosi welcomed Trump’s request for $2,000 per adult, stating ‘Democrats are ready to bring this to the floor this week by unanimous consent.’

European indices head higher but FTSE 100 limited by stronger pound

The Euro STOXX Index traded at 3516.5 at midday, up 0.6% from 3496.7 at the end of play Wednesday.

France’s CAC 40 was up 0.4% at 5494.4 from 5472.3, while Germany’s DAX was up 0.7% at 13498.0 after closing yesterday at 13405.6.

Meanwhile, over the Channel, the FTSE 100 was trading slightly lower at 6447.8 from 6451.8, as a stronger pound limited its ability to follow European indices higher.

‘Same serious areas of disagreement’ on Brexit deal

Hopes of a Brexit deal were raised this morning when reports suggested both sides were aiming to strike a deal by the end of play today, before British housing secretary Robert Jendrick said there was ‘no news to report’.

‘There’s still the same serious areas of disagreement whether that’s on fisheries or the level playing field,’ Jendrick said. ‘But at the moment there isn’t sufficient progress. It isn’t a deal that the prime minister feels he can sign us up to.’

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. Irish prime minister Micheal Martin said on Wednesday that the ‘gap is still wide on fish’ but said ‘there should be a deal’ based on the progress made so far.

UK prime minister Boris Johnson and European Commission president Ursala von der Leyen are expected to hold another phone call today or tomorrow to check-in on progress and try to break the deadlock with just eight days left until December 31.

UK prepares tighter lockdown rules to tackle new coronavirus strain

The UK government is meeting today to consider whether it should impose harsher lockdown rules to stop the spread of a new strain of coronavirus that is thought to be much more transmissible than the original.

There are no plans to alter plans for Christmas, which have already been rolled-back upon discovery of the new strain, but it is thought that more areas of the country could be placed under the strictest tier 4 restrictions as early as Boxing Day.  

The meeting comes on the same day that France reopened its border with the UK after closing it to stop the spread of the new variant as both sides look to introduce new testing protocols to get haulage and travel back up and running across the Channel.

Forex: Pound rises against euro and dollar

Sterling was gaining ground on Wednesday as hopes of a Brexit deal were revived yet again and as the UK’s border with France was reopened.

GBP/USD traded at 1.34296 at midday, up 0.5% from 1.33621 at the close of trade yesterday.

Meanwhile, revived hopes of a possible Brexit breakthrough helped the pound rise against the euro, with EUR/GBP down 0.3% at 0.90785 from 0.91039.

EUR/USD was trading at 1.21901 at midday from 1.21632 at the last close.

City Index analyst Fiona Cincotta writes today about what the technical view looks like for EUR/USD ahead of US data being released this afternoon, while Tony Sycamore writes about what to expect from the dollar in 2021.

Start trading the opportunities in the forex market today.

Commodities: Oil pushes back above $50

Brent traded at $50.11 per barrel at midday, edging higher from $49.82 at the close on Wednesday, while WTI followed to $47.01 from $46.79.

The rise comes despite the American Petroleum Institute revealing US crude inventories rose by 2.7 million barrels last week when the market was expecting for a 3.2 million barrel decline. The EIA crude oil stocks change is scheduled at 1530 GMT, while natural gas storage changes will be released at 1700 GMT, giving further insight into the level of demand in the US.

Start trading the volatility in oil prices today.

Gold was trading at $1867 at midday, finding higher ground after ending yesterday at $1860.

Start trading gold and other precious metals today.

Market-moving events in the economic calendar

In terms of economic data, attention is on the US this afternoon. There is personal consumption, income and spending data, jobless claims, and durable goods orders at 1330 GMT, followed by new home sales and the Michigan consumer sentiment index at 1500 GMT.

Elsewhere, there is Canada’s GDP data at 1330 GMT and Switzerland’s SNB quarterly bulletin at 1400 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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