Opening Bell: Futures, Stocks Jump On Stimulus Hopes, Brexit Talks; Pound Soars

Key Financials/h2

US futures, including for the Dow, S&P, NASDAQ and Russell 2000, and European stocks started the week on the right foot, opening higher on Monday. Positive news regarding economic stimulus negotiations in Washington and Brexit talks in Brussels, as well as the delivery}} of COVID-19 vaccines across the US has boosted markets.

The dollar faltered and gold remained under pressure.

Global Financial Affairs/h2

Investors remain hopeful that a fiscal aid package is in the cards as a bipartisan group of lawmakers prepares to unveil a $908 billion coronavirus spending bill to Congress on Monday. However, approval from lawmakers is by no means a forgone conclusion.

Even after global stocks posted their first weekly loss in six last week, the supply-demand balance remains bullish as investors seem to be able to see past a multitude of risks. Stocks have hit record after record at a time when uncertainty is arguably the highest it has ever been in most investor’s lifetime.

It will be months until the global population is fully inoculated against COVID-19 with frontline health care workers and residents of long-term care facilities as the initial priority. The Wall Street Journal warned that the pandemic will not end “reorganizes its benchmark to replace financial and energy firms with three technology companies. The reshuffle will more accurately represent the country’s retail-dominated market and is designed to attract new passive funds and foreign investors.

Japan’s Nikkei 225 rose 0.3% on improving business sentiment. The country's Tankan—the main gauge representing large manufacturers—advanced to -10 from -27.

US stocks trimmed losses before the close on Friday after lawmakers passed a stopgap funding bill to avert a government shutdown, followed by an announcement from President Donald Trump that vaccines will be administered “within 24 hours.” Though US markets still closed mostly in the red, traders locked themselves into risk over the weekend.

Yields, including on the 10-year Treasury, jumped.

The bounce was off a hammer, after nearing the 50 DMA that has been supporting the bottom of a rising channel since the August bottom

Progress on a stimulus package does not bode well for dollar investors, as pumping more cheap money into the economy reduces the currency’s value.

The decline completed a pennant, bearish after the preceding drop—the second continuation pattern, after the H&S of August to November.

Gold fell for the third day in four, despite the greenback's weakness, as investors continue to rotate back into risk assets.

The yellow metal is retesting the 200 DMA, which it has been trading at all week, while the 50 DMA weighs on the commodity, after the 50 DMA crossed below the 100 DMA, which is reinforcing the top of a falling channel.

Bitcoin, which some say draws investors away from gold, is little changed. The cryptocurrency is finding resistance by the top of either a continuation pennant or ascending channel.

An upside for the digital token would signal a resumption of the uptrend, past the $20,000 level, an event which will surely catapult the digital currency even higher.

Oil reached $47 after another tanker explosion in the Middle East, raising concerns about stability in the region.

WTI resumes its underlying uptrend line after a pause in the form of a bullish flag.

Up Ahead/h2

• Tuesday brings China industrial production and {{ecl-465||retail sales data for November.
• The Federal Reserve meets Tuesday and Wednesday, with markets widely expecting fresh guidance on its continued asset purchases.
• On Thursday, policy decisions from the Bank of England and central banks in Mexico, Switzerland and Indonesia will be released.
• On Friday there are interest rate decisions from Japan and Russia.

Market Moves/h2

Stocks/h3

• Futures on the S&P 500 Index rose 0.6%.
• The Stoxx Europe 600 Index jumped 0.8%.
• The MSCI Asia Pacific Index climbed 0.1%.
• The MSCI Emerging Markets Index sank 0.1%.

Currencies/h3

• The Dollar Index dipped 0.4% to 90.59.
• The euro gained 0.3% to $1.2153.
• The British pound surged 1.3% to $1.34.
• The onshore yuan strengthened 0.1% to 6.539 per dollar.
• The Japanese yen strengthened 0.1% to 103.93 per dollar.

Bonds/h3

• The yield on 10-year Treasuries gained one basis point to 0.91%.
• The yield on two-year Treasuries increased less than one basis point to 0.12%.
• Germany’s 10-year yield increased two basis points to -0.62%.
• Britain’s 10-year yield climbed three basis points to 0.202%.
• Japan’s 10-year yield decreased less than one basis point to 0.011%.

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Commodities

• West Texas Intermediate crude gained 1.6% to $47.33 a barrel.
• Brent crude increased 1.6% to $50.77 a barrel.
• Gold weakened 0.3% to $1,833.50 an ounce.