US Market Open: Rally continues as Democrats mull impeaching Trump

US markets are continuing to go from strength-to-strength and are called to open at fresh highs today, as Democrats seek to remove president Trump from power.

New Highs 3

  • US markets are called to open at new all-time highs today, as pressure mounts on president Trump following the turmoil that saw rioters storm the US Capitol building.
  • European markets are largely trading higher as the DAX also climbed to a new record high, while the FTSE 100 lagged behind.
  • In forex, the dollar is in focus ahead of non-farm payrolls at 1330 GMT.
  • In commodities, oil prices have continued to rally following supply cuts announced earlier this week.

US markets rally continues to hit new highs

The rally in US markets is expected to continue for a fourth consecutive day, with both the S&P 500 and Dow Jones called to open at new record highs.

The S&P 500 is called to open 0.3% higher at 3815.0 today  after ending yesterday at 3804.6.

The Dow Jones is set to open follow 0.3% higher to 31134.5 from 31036.5 at the last close.

Start trading the opportunities with indices today.

Democrats consider impeachment proceedings against president Trump

Democrat leaders are considering launching fresh impeachment proceedings against president Donald Trump following the tumultuous scenes of rioters storming the US Capitol building this week.

The leader of the House of Representatives, Democrat Nancy Pelosi, and the minority leader of the Senate, Chuck Schumer, have called for impeachment proceedings to be launched if vice president Mike Pence and the remaining members of Trump’s cabinet do not take action to remove him from office.

The vice president has been called to invoke the 25th amendment, which allows a majority of the cabinet to declare Trump as ‘unable to discharge the powers and duties of his office’ and put Pence in charge. However, there seems limited appetite among leading Republicans to turn on Trump considering he has just 12 days in office. That also raises questions about whether any impeachment could prove effective in the limited timeframe.

A number of Trump’s aides and cabinet members have resigned following the attack on the Capitol, including the transportation secretary Elaine Chao, the wife of the Republican Senate leader Mitch McConnell, who said there was ‘no mistaking’ Trump’s rhetoric fuelled the turmoil.

Trump came the closest to conceding the election yesterday when he promised a ‘smooth transition’ to a Biden presidency on January 20, while condemning rioters who stormed the Capitol building that he had encouraged only 24 hours earlier. It was also the first time the president didn’t repeat unfounded claims that the election was rigged and riddled with fraud.

This suggests the next couple of weeks could prove disruptive and throw up more surprises for markets.

US suspends tariffs on French goods

The US said it has suspended plans to introduce new tariffs on French goods while it considers imposing a wider sweep of tariffs on a larger group of countries. The US announced it would slap new tariffs on the likes of French cosmetics and other imports in retaliation for the country introducing a new digital services tax that predominantly targets big US tech companies.

However, the US said it will no longer implement the tariffs next week as planned because it is investigating similar digital services taxes being introduced in other countries like India, Italy, and the UK. It said it would look to take a coordinated approach against all the countries rather than individual nations. However, it is also thought to give more time for the US and the EU to discuss how the world can join forces to properly tax Big Tech companies.

Tesla shares hit new all-time high

Tesla shares closed at a new record high in yesterday’s session and is expected to rise further when markets open today. Shares in the electric carmaker have rallied by almost 200% in the past six months alone as it continues to ramp-up deliveries and generate profits. It has also benefited from the Democrat’s success in securing control of Congress in the recent Senate runoff races, which is thought to allow the party to implement its huge investment in renewable and green projects when Joe Biden becomes president later this month.

It was widely reported yesterday that Tesla’s chief executive Elon Musk, who also owns Space X, became the world’s richest man following the recent surge in Tesla shares. Bloomberg said Musk had a net worth of $188.5 billion after booking yesterday’s gains, just ahead of Amazon’s boss Jeff Bezos at $187 billion.

Hyundai and Apple hold early talks over electric cars

Hyundai Motors said it was holding early stage talks with Apple about working together on a new electric vehicle. ‘Apple and Hyundai are in discussions, but as it is at an early stage, nothing has been decided,’ the South Korean firm said.

Hyundai conceded Apple is speaking to other carmakers about a tie-up, casting doubt on whether anything firm will come of it, but it does confirm that Apple is eagerly looking to break into the motor industry.

European markets: DAX hits new all-time high

The Euro STOXX Index traded at 3643.5 at midday, up 0.4% from 3628.7 at the end of the last trading session.

France’s CAC 40 was up 0.3% at midday at 5698.0, marking its highest level since February, compared to 5679.5 at the last close.

Germany’s DAX was up 0.5% at midday at 14070.8 – a new all-time high - from 13996.1 at yesterday’s close. City Index analyst Fiona Cincotta has a look at what the record-high for the DAX means and whether it is overbought.

Meanwhile, over the Channel, the FTSE 100 was trading broadly flat at 6862.3 compared to 6861.5.

In today’s Top UK Stocks to Watch, Pets at Home shares surge higher after it upgrades its guidance, M&S reports sales figures for the Christmas period, Barratt prepares to resume dividend payments, and Rentokil and Clarkson say they will beat expectations.

EU secures lion’s share of Pfizer-BioNTech vaccine capacity

The European Union has bought another 300 million doses of the Pfizer-BioNTech vaccine, according to the European Commission. On top of previous orders, that takes the EU’s total to 600 million, which accounts for almost half the 1.3 billion doses that Pfizer will produce this year.

Eurozone unemployment rate falls for second consecutive month

The unemployment rate in the eurozone fell for the second consecutive month in November. Eurostat said the jobless rate fell to 8.3% from 8.4% in October, surprising markets that were expecting it to edge up to 8.5%.

This means net 172,000 people that were unemployed in October found work in November. Still, there were 1.4 million fewer people in employment compared to November 2019, it said.

Notably, although overall employment improved, the youngest members of the workforce continue to struggle with the youth unemployment rate rising to 18.4% from 18% in October.  

England plays catch-up as it orders travellers to get coronavirus tests

Travellers arriving in England will have to provide a negative COVID-19 test before they allowed to enter as of next week, as new rules are introduced by the government. Any person arriving by plane, boat or train will need to prove they do not have COVID-19 before being permitted entry, mimicking rules that many other countries have already put in place.

Notably, there will be some exceptions. Hauliers delivering goods across the border, children under 11 and people returning from certain countries will not have to abide by the new rules.

The government said it was also extending a ban on travellers from South Africa and the wider region after the country found a new variant of the virus.

UK retailers warn of post-Brexit tariffs

Some UK retailers could face new tariffs on goods they send to the EU despite the last-minute Brexit deal struck on December 24 maintaining tariff and quota-free trade between the two neighbours.

Retailers have warned that goods or commodities that are bought from outside the UK but then re-exported to the EU could be hit by EU tariffs under the bloc’s rules of origin. The British Retail Consortium, a trade body representing some of the UK’s largest retailers, said it is ‘working with members on short-term options and is seeking dialogue with the government and the EU on longer-term solutions to mitigate the effects of the new tariffs’.

‘Tariff free does not feel like tariff free when you read the fine print (of the deal),’ said Marks & Spencer chief executive Steve Rowe, according to Reuters. ‘For big businesses there will be time consuming workarounds but for a lot of others this means paying tariffs or rebasing into the EU.’

UK housing market growth slows in December

House prices in Britain have continued to rise in December but at a significantly slower rate than in previous months, Halifax revealed. House prices rose 6% in December compared to a year earlier, having slowed from the 7.6% year-on-year growth reported in November.

Activity and prices have been buoyed over the last year as the pandemic fuelled people to move to a new house, stamp relief duty encouraged people to scale-up and because of existing schemes to help first-time buyers.

Halifax said house prices should continue to rise in the near-term, but warned of a tougher 2021, especially when the stamp relief duty expires at the end of March. The outlook for the second half of the year relies on how quickly the UK economy can recover from the pandemic, with Halifax warning ‘downward pressure on house prices remains likely as we move through 2021’.

Forex: Dollar in focus ahead of non-farm payrolls

The dollar is in focus today ahead of US non-farm payrolls at 1330 GMT. City Index analyst Matt Weller has a look at what to expect from US nonfarm payrolls today and outlines what the market reaction could be.

GBP/USD was trading at 1.35892 at midday, up 0.2% from 1.35654 at the last close.

EUR/USD traded at 1.22471 at midday, down 0.2% from 1.22718 at the end of play on Thursday.

Meanwhile, EUR/GBP was at 0.90127, down 0.4% from 0.90464.

Start trading the opportunities in the forex market today.

Commodities: Oil price rally continues as Brent pushes past $55

Brent was trading at $55.22 at midday, up 1.4% from $54.44 at the close yesterday, while WTI rose to $51.58 from $50.97.

Oil prices have rallied since Tuesday, when Saudi Arabia said it would cut its output over the coming months as part of agreement struck between OPEC+. The country said it would slash 1 million barrels per day of output in February and March, which will only be partly offset by minor increases made by Russia and Kazakhstan.

Still, there are several headwinds facing oil prices. Firstly, US fuel inventories reported their biggest increase since April, suggesting lacklustre demand in the world’s largest economy. Secondly, new lockdowns being introduced in Europe and surging cases and deaths is likely to push back the global economy’s ability to recover into the second half of 2021. However, for now, prices remain buoyed by the upbeat tone in equity markets and the expectations that central banks will continue to prop up economies whilst vaccines are rolled out.

Start trading the volatility in oil prices today.

Gold had lost ground on Friday, trading 1.1% lower at $1893 compared to $1914 at the close yesterday.

Start trading gold and other precious metals today.

Market-moving events in the economic calendar

The economic calendar turns to the US this afternoon, with nonfarm payrolls, average hourly earnings and unemployment rate all due at 1330 GMT. The Fed’s vice chairman of the board of governors, Richard Clarida, is due to make a speech at 1600 GMT.

There is also Canada’s net change in employment, average hourly wages and unemployment rate at 1330 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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