US Market Open: Waiting on US fiscal stimulus and Brexit clarity

US indices are pointing to a flat open as traders eye fiscal stimulus negotiations in Washington.

Quiet session 1

  • US markets are poised to open near flat as US fiscal stimulus negotiations remain in flux
  • European indices are ticking higher in relatively quiet pre-holiday week trade.
  • The Bank of Japan left policies unchanged and did not seem particularly concerned with the yen’s recent appreciation
  • Sterling and the euro are consolidating their recent gains against the US dollar.
  • Both oil and gold are similarly quiet as traders wait for clarity on negotiations on both sides of the Atlantic.

US indices to open at new record highs

The S&P 500 is poised to open 0.1% higher today at 3718.

The Dow Jones is set to open essentially flat at 30,211.

Start trading the opportunities with indices today.

All eyes remain on US stimulus negotiations

After a marathon negotiating session last night, the much-discussed US fiscal stimulus bill continues to grind slowly toward an agreement. As it stands, the two sides are at an impasse over Democrat requests for federal funds to match 100% of FEMA payouts for pandemic-related disasters and Republican demands to end the Federal Reserve’s emergency lending program. Adding an element of uncertainty to the proceedings, government funding is set to run out tonight, so traders will be focused on whether that deadline can make a deal happen, or whether a short-term stopgap bill is in play.

FDA approves Moderna’s vaccine

As anticipated, the US Food and Drug Administration (FDA) approved Moderna’s COVID-19 vaccine for emergency-use authorization. The company has indicated its on track to provide 20M doses this month and up to 100M doses to the US in Q1 2021. While multiple vaccines are now being distributed, the pandemic continues to ravage the globe at an unprecedented rate, with restrictions likely to remain in place well into 2021.

European indices edge higher in quiet trade

European indices are edging higher as of midday Friday, though volatility remains low amidst pre-holiday week trade and political wrangling on both sides of the Atlantic.

The Euro STOXX Index traded 0.1% higher midday.

France’s CAC 40 was essentially flat, while Germany’s DAX had was rising 0.4% to 13719. The index is now at its highest level since February 2020, representing the recovery of nearly all of its pandemic-induced losses this year.

Meanwhile, over the Channel, the FTSE 100 was ticking up 0.2% as investors held out hope for a Brexit negotiation breakthrough over the weekend.

Bank of Japan makes no major changes, as expected

The Bank of Japan (BOJ) made no major changes to monetary policy, as widely expected. The only tweak was an extension to the central bank’s funding package. In his comments, BOJ Governor Kuroda vowed to explore why the BOJ has failed to hit its 2% inflation target (for the past 20+ years!). Most importantly for FX traders, Kuroda noted that there is "no need to think that the yen rise is having serious effects on the economy" essentially ruling out intervention or “jawboning” to push the yen lower in the immediate future.

Forex: Sterling dips, greenback and euro edge higher

GBP/USD traded at 1.3542 at midday, down 0.3% on the day to consolidate its 300-pip rally so far this week.

EUR/USD was essentially flat at 1.2266, holding steady at its highest level since April 2018.

Start trading the opportunities in the forex market today.

Commodities: Oil and gold hold their ground

Mirroring the slow trade in other markets, both Brent and WTI were trading near flat ahead of the US open. The two contracts remain in a holding positioning pending clarity on near-term catalysts including the prospects for a Brexit deal and US fiscal stimulus.

Start trading the volatility in oil prices today.

Gold also consolidated in the upper $1800s as precious metals traders were hesitant to push prices above the $1900 level, wary of the potential for slow holiday trading in the coming weeks.

Start trading gold and other precious metals today.  

Market-moving events in the economic calendar

The economic calendar is quiet today, with just retail sales out of Canada at 8:30 ET (12:30 GMT) on tap. Traders will be more focused on headlines around Brexit and fiscal stimulus negotiations.

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.


More from Indices

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.