US Market Open: Indices to follow European markets higher

US markets are expected to follow European indices higher as vaccine hopes outweigh fears that coronavirus cases are rising again.

Trading floor 2

  • US markets are set to open higher on Tuesday.
  • Markets are currently weighing up the rollout of vaccines and the surge in coronavirus cases, with several countries tightening lockdown rules this week.
  • In stock news, Big Tech is in focus as regulators introduce new rules to rein in their dominance.
  • European indices are trading higher at midday, with the CAC and DAX both up 0.8%, but the FTSE 100 is trading marginally lower.
  • In commodities, oil prices have held steady above the $50 mark while gold has edged higher.

US indices to push higher

The S&P 500 is called to open at 3668.7 on Tuesday, up 0.5% from 3651.5 at the close of trade on Monday.

The Dow Jones is set to open 0.4% higher at 30024.0 from 29912.5 yesterday.

Start trading the opportunities with indices today.

Markets weigh-up vaccine rollout against surging coronavirus cases

The fight back against coronavirus took a step up this week as the US started to rollout the Pfizer-BioNTech vaccine, kicking off a campaign by incoming president Joe Biden to get 100 million Americans vaccinated within 100 days of taking office.

However, coronavirus cases continue to surge in parts of the country and national deaths breached an unfortunate landmark on Monday after total deaths passed the 300,000 mark.

The same is true in other countries that have decided to introduce strict new lockdown rules to stem a rise in cases. The UK capital will enter tougher restrictions this week, while Germany and Netherlands are among those focusing on national measures. French prime minister Jean Castex said there is no guarantee that restaurants and hospitality can reopen in January when current restrictions end, stating it would depend how the virus behaves over the holiday period.

Reuters reported on Tuesday that the European Medicines Agency is set to approve the Pfizer-BioNTech vaccine on December 23, giving the bloc its first approved vaccine weeks after the UK, Canada, the US and others gave it the green light.

US stimulus package takes step in the right direction

Confidence that a new fiscal stimulus package can be passed by the end of the week have improved after a bipartisan group of Senators stripped back their bill from $908 billion to $748 billion. It removed measures concerning liability protections for business and funds for state and local governments, which were causing disagreements between Republicans and Democrats, in the hope of gaining the approval of the house.

Big Tech under the spotlight

The EU is expected to unveil new regulations to try and bring big tech companies into line, threatening fines of up to 10% of global revenue if they break the new rules. The Digital Markets Act aims to tackle the dominance of big tech firms while the Digital Services Act will get them to take greater responsibility for the content on their platforms.

The FT reported that drafts of the new regulations suggest the EU could look to break-up any companies that break the rules and are fined three times within five years.

The UK also published new rules for the industry, threatening similar fines for failing to properly manage content and remove illegal or harmful content.

Most of the biggest players – like Amazon, Apple, Google and Facebook – come from the US, but they are even starting to grab attention at home after Facebook was hit with its first anti-trust fine in the US last week as regulators start to consider whether it should be forced to sell-off Instagram and Whatsapp.

Apple to increase iPhone production by 30%

Apple is planning to manufacture up to 96 million iPhones in the fist six months of 2021, up nearly 30% from the first half of this year, according to Nikkei. The report said it will be producing its new range of iPhone 12s as well as the iPhone 11 and SE, but says its target could be impacted by a shortage of parts.

European indices rise but FTSE 100 dips lower

The Euro STOXX Index traded at 3498.3 at midday, up 0.8% from 3498.3 at yesterday’s close.

France’s CAC 40 was also up 0.8% at 5547.0 after closing at 5511.0 on Monday, while Germany’s DAX followed with a similar rise to 13319.0 from 13211.1.

Meanwhile, over the Channel, the FTSE 100 was trading at 6509.5 at midday, marginally lower than 6514.4 at the close yesterday.

Start trading the opportunities with indices today.

UK unemployment rises as redundancies hit record high

Official data showed UK unemployment climbed to 4.9% in the three months to October, up from 4.8% in the three months to September. That rise was smaller than the 5.1% expected by a analysts. Notably, redundancies reached a record high of 370,000 in the period. Unemployment is expected to continue rising until it peaks next year at around 8%, according to the Bank of England.

Forex: Tight range trading

EUR/GBP traded at 0.90955 at midday, down 0.2% from 0.91110 at the close of trade on Monday.

Meanwhile, EUR/USD was up 0.1% 1.21566 from 1.21439, while GBP/USD was up 0.3% at 1.33641 from 1.33255. City Index analyst Fiona Cincotta has a look at the GBP/USD chart from a technical point of view this morning.

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:

FX Pair

Latest Price

% Change

USD/RUB

73.395

-0.24%

GBP/JPY

138.76

0.10%

USD/MXN

20.143

-0.09%

USD/JPY

103.95

-0.08%

USD/BRL

5.1189

0.05%

Commodities: Oil holds steady as gold edges higher

The International Energy Agency said it expects the demand for oil to rebound slower than previously expected in 2021 on the belief that the airline market will take longer to recover. It said consumption next year should hit 96.9 million barrels per day, up from 91.2 million last year but lower than the 97.1 million per day figure forecast beforehand.

The IEA warned that although vaccination programmes is supporting prices, it will be ‘several months before we reach a critical mass of vaccinated, economically active people and thus see an impact on oil demand’.

Brent was holding steady at midday, trading at $50.31 from $50.30 at the end of play yesterday, while WTI traded at $47.16 from $47.11.

Start trading the volatility in oil prices today.

Gold traded 0.9% higher at $1845.0 per ounce from $1827.2 at yesterday’s close.

Start trading gold and other precious metals today.  

Market-moving events in the economic calendar

The next event in the economic calendar is US industrial production numbers at 1415 GMT.

The governor of the Bank of Canada, Tiff Macklem, is scheduled to speak on ‘Trading for a Sustainable Recovery’ at 1930 GMT.

Later, attention turns to Australia as the Commonwealth Bank of Australia releases manufacturing and services data at 2200 GMT, followed by the Westpac Leading Index at 2330 GMT. The day is rounded off by the release of import and export data from Japan at 2350 GMT.

Central banks are the overarching theme this week, with the US Federal Reserve on Wednesday, the Bank of England on Thursday, and the Bank of Japan rounding off the week on Friday.

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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