US Market Open: Republicans and Democrats wrangle over stimulus bill

US markets are called to open higher today following the heavy selloff last week, as Democrats begin to push ahead with plans to introduce a new stimulus bill.

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  • Republicans are to meet with president Joe Biden today to vent their displeasure with the size of his $1.9 trillion stimulus bill.
  • European markets are up sharply today as tensions over a shortage of vaccines eased over the weekend.
  • Economic data revealed UK manufacturing almost stalled in January while EU unemployment held steady.
  • In forex, the euro has slumped against both sterling and the dollar.
  • In commodities, silver has soared to its highest level in eight years as Reddit-enthused traders find their next target after GameStop, AMC and other US stocks.


US markets to open higher

The S&P 500 is called to open 1.1% higher today at 3748.5 after ending last week at 3707.9.

The Dow Jones is set to open 0.8% higher at 30208.5 from 29957.0 at the end of play on Friday.

Start trading the opportunities with indices today.


Republicans urge for smaller stimulus

Republicans are urging president Joe Biden to scale back his $1.9 trillion stimulus plan if he wants to win the party’s support.

The Democrats, now equipped with control over Congress, have vowed to push ahead with the plan with or without Republican backing but Biden is keen to strike bipartisan support if he can. The president has invited disgruntled Republicans to the White House this week but seems unlikely to cave-in to claims that the bill is too costly. They are expected to have a ‘full exchange of views’ during an initial meeting this afternoon.

‘With the virus posing a grave threat to the country, and economic conditions grim for so many, the need for action is urgent, and the scale of what must be done is large,’ said White House spokesperson Jen Psaki.

The two parties appear far apart on the next round of stimulus, with purse-string watching Republicans reportedly supporting an alternative proposal costing just $600 billion.


EU attempts to overturn tax judgement in Apple case

Antitrust officials in the EU are arguing that legal errors led to Apple being let off paying over EUR13 billion in taxes as they try to overturn a verdict made by the General Court.

The General Court ruled last year that Apple was not liable for the taxes because the EU had not proven Apple had gained an unfair advantage, despite officials claiming it paid as little as 0.005% in tax during some years.

‘The General Court’s failure to properly consider the structure and content of the decision and the explanations in the Commission’s written submissions on the functions performed by the head offices and the Irish branches is a breach of procedure,’ the European Commission said.

A hearing on the case is expected to be conducted in the coming months.


Can Microsoft’s Bing replace Google in Australia?

Australia is standing firm in its dispute with Google after prime minister Scott Morrison said Microsoft’s Bing search engine could act as a replacement if Alphabet follows through with its threat to remove Google.

The government has introduced laws that require Google and social media companies like Facebook to pay domestic media outlets for the news that appears on their sites and platforms. That has ruffled the feathers of Google, who has threatened to pull out of the country because the new laws would make its business ‘unworkable’. Google accounts for 94% of all the country’s web searches.

However, Microsoft has now held talks with the government and is reported to be ready to grow its Bing search engine under the new laws.


European markets up sharply

The Euro STOXX Index traded at 3536.5 at midday, up 1.9% from 3471.5 at the end of play last week.

France’s CAC 40 was up 2% at 5474.0 from 5368.0 at the close on Friday.

Germany’s DAX was up 1.6% at 13621.5 from 13402.0 at the last close.

Meanwhile, over the Channel, the FTSE 100 was up 2% at 6474.5 from 6348.3 at the end of last week.

In today’s Top UK Stocks to Watch, JD Sports buys US outfit DLTR, ASOS buys Topshop and other brands from Arcadia, Ferguson completes its sale of Wolseley, LandSec confirms its latest quarterly dividend, and Hargreaves Lansdown benefits from the volatility caused by the US election and Brexit.

Start trading the opportunities with indices today.


Eurozone unemployment holds steady

The unemployment rate in the eurozone held steady at 8.3% in December, according to the latest figures out of the bloc.

There are around 13.67 million people unemployed in the 19-country bloc, only slightly higher than the 13.61 million reported in November. Notably, unemployment edged higher in the biggest economies in the eurozone like Germany, France and Italy, but fell in other countries such as the Netherlands, Portugal and Slovakia.

The stable rate of unemployment is largely down to the support being offered by governments in the form of furlough schemes and other measures.


UK manufacturing came ‘close to stalling’ in January

UK manufacturing activity almost stalled in January as the pandemic and Brexit disrupted export orders, according to the latest data from IHS Markit.

The manufacturing PMI reading for January came in at 54.1. This signals growth and was increased from the preliminary reading of 52.9, but down heavily from the three-year record of 57.5 recorded in December.

‘Whereas many countries are seeing manufacturers provide a much-needed support to economic growth as the service sector is hit by COVID-19, the UK’s manufacturing sector has come close to stalling,’ said IHS director Rob Dobson.

Notably, smaller manufacturers have been harder hit than mid-to-large-sized peers.

There are hopes that the UK’s manufacturing industry can grow at a faster pace going forward so long as the country’s vaccination programme continues to progress at pace and companies get more accustomed to the new post-Brexit trading arrangements.


EU secures 9 million more doses of AstraZeneca vaccine

AstraZeneca will deliver nine million more doses of its coronavirus vaccine to the EU during the first quarter of 2021 and will ship jabs sooner than expected, according to the president of the European Commission Ursala von der Leyen.

That will mean AstraZeneca will deliver around 40 million doses before the end of March – just half the original 80-million-or-so that was originally agreed. Lower than expected yields has weighed on production and AstraZeneca warned in January that it wouldn’t be able to meet EU demand during the initial months of the year, raising tensions with the EU that is desperately playing catch up with its vaccination programme.

Notably, the EU only formally approved the AstraZeneca vaccine on Friday, making it the third to be given the green light by the bloc alongside Pfizer-BioNTech and Moderna.

‘AstraZeneca will deliver 9 million additional doses in the first quarter (40 million in total) compared to last week’s offer and will start deliveries one week earlier than scheduled’, von der Leyen said on Twitter.

This comes after the EU considered triggering a controversial clause within the Brexit deal over the weekend that would have tried to prevent vaccines being exported out of the Republic of Ireland and into Northern Ireland, before quickly backtracking. The UK’s vaccine minister Nadhim Zahawi said the country is now aiming to collaborate with the EU on the rollout of vaccines as tensions died down.


UK prepares to apply to trans-pacific trade bloc

The UK will formally apply to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) this week.

The trading bloc contains 11 countries – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam – and is designed to remove tariffs on goods traded between the group.

The UK’s trade minister Liz Truss said she intends to file a letter of intent to join on Monday as the UK looks to strike its own trading arrangements around the world following Brexit.


Forex: Euro weakness

GBP/USD was trading at 1.37153 at midday, broadly level with 1.37050 when markets closed last week.

EUR/GBP was down 0.5% at 0.88113 from 0.88560 at the end of play last week.

Meanwhile, EUR/USD was down 0.6% at 1.20855 from 1.21560 at the close on Friday.

Start trading the opportunities in the forex market today.


Commodities: Silver prices climb to 8-year high

Brent trades at $55.77 a barrel today from $55.08 when markets closed on Friday, while WTI followed higher to $52.71 from $52.15.

Start trading the volatility in oil prices today.

Gold was trading 1% higher today at $1864 an ounce from $1844.7 at the close on Friday.

Notably, the rise in gold prices has been partly driven by a surge in silver prices as Reddit-enthused retail traders target the metal as their next target. Data from BlackRock showed the world’s largest silver-back ETF, the iShares Silver Trust, saw almost $1 billion of inflow on Friday, according to the Financial Times.

Silver was trading almost 10% higher today at $29.58 an ounce from $26.93 when markets closed on Friday.

City Index analyst Fiona Cincotta has a technical look at silver as plans to short squeeze the metal to never before seen levels circulate on Reddit.

Start trading gold and other precious metals today.


Market-moving events in the economic calendar

This afternoon sees Canada’s manufacturing PMI out at 1430 GMT. The US has both the Markit manufacturing PMI out at 1445 GMT and the ISM manufacturing PMI at 1500 GMT. Eric Rosengren, the head of the Federal Reserve Bank of Boston, will make a speech at 1910 GMT.

City Index analyst Joe Perry has a look at what to expect over the coming days in the Week Ahead.

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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