US
President Donald Trump vetoed a bipartisan defense policy bill on Wednesday and raised the prospect that the United States could face a government shutdown during a pandemic. If the spending package gets blocked, large parts of the U.S. government could start to shut down next week for lack of funds.
Stock indexes closed with modest gains as investors turned optimistic about the coronavirus vaccine rollout as Pfizer reached a deal with the federal government to provide 100 million additional doses of the company’s Covid-19 vaccine. Trading volumes were thinner as is always the case during the Christmas week.
The Dow rose 0.4%, the S&P 500 moved higher 0.1% and the technology-focused Nasdaq Composite fell 0.3%. However, The Russell 2000 small-capitalization stocks outperformed with a 0.9% gain, ending at a record 2,007.10.
EUROPE
The UK and the European Union are on the verge of unveiling a historic post-Brexit trade deal as negotiators come to a compromise on fishing rights. An official announcement is expected Thursday morning as chief negotiators iron out final details.
PM Boris Johnson has accepted that the bloc’s share of the catch in the UK waters should fall by 25%. This would be phased in over five and a half years.
European markets closed higher on Wednesday amid rising optimism about a post-Brexit trade agreement. News about France re-opening its borders with Britain contributed to a positive mood in the markets.
The pan European Stoxx 600 climbed 1.08%, U.K.’s FTSE 100 gained 0.66% and Germany’s DAX firmed up 1.26%. The Euro ended at 1.22 and GBP at 1.351 against the Greenback.
UK car production declined by 1.4% in November annually to 106,243 units. Output for domestic markets dropped 10.4%, while that for exports gained marginally by 0.3% (SMMT report). German import prices decreased 3.8% on a yearly basis, following a 3.9% drop in October (Destatis).
JAPAN
The Nikkei 225 rose 0.33% to finish its trading day while the Topix index closed 0.23% higher. The yen was at 103.57 per US dollar. Economic activity and prices have remained under prolonged downward pressure due to the impact of Covid-19. Data showed inflation might take even longer to hit the central bank’s 2% target.
CHINA
Chinese stocks rose 0.02%, but Alibaba Group Holding Ltd slumped 6.28%, its biggest daily drop in six weeks, after China’s market regulator said it will investigate the tech giant for suspected monopolistic behavior.
China and the European Commission appeared close this week to announcing a landmark agreement that would make it easier for their companies to invest in each other’s economies. But Jake Sullivan, national security adviser to U.S. President-elect Joe Biden, tweeted signaling that the president-elect was not happy about the deal.
China is extending support measures for the country’s smallest businesses, a signal that full economic recovery from the shock of the coronavirus pandemic still faces many uncertainties.
GOLD
Markets in a holiday-shortened week this week have been torn between positive news on US stimulus and the ongoing surge in global COVID cases. Meanwhile, the Federal Reserve and combination of fiscal stimulus continues to support optimism for gold prices. Gold closed at $1,871.63/oz.
OIL
Oil prices rose more than 2% on Wednesday, boosted by draws in U.S. inventories of crude, gasoline and distillates that lifted investors’ hopes for some return in fuel demand. Brent crude futures gained 2.24%, to settle at $51.20 per barrel, while West Texas Intermediate (WTI) crude futures settled 2.34% higher at $48.12 per barrel. Oil markets remain unsure about the future recovery of oil demand as a new highly infectious variant of the coronavirus hit UK, resulting in countries shutting their borders to the country.
TO CONCLUDE……
The best thing to have happened would be the finalization of the Brexit deal (although not fully finalized!), removing some suspense as the EU and the UK forge a path going forward. Concerns about the new strain still remain, but it looks as though the vaccines made by Moderna and Pfizer would be able provide immunity against this new variant as well. President Trump goes about vetoing aid bills and defense packages, churning negative sentiments in the markets. However, there was little reaction in the markets, suggesting that most Investors are set in holiday mood and are looking to open shop next year.
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