Opening Bell: Futures Wobble, Stocks Mixed On Stimulus, COVID Stress; USD Up

 | Dec 22, 2020 06:53

  • Congress approves $900B coronavirus relief bill, investors not impressed
  • Brexit negotiations fail to resolve
  • Markets remain pressured by new coronavirus lockdowns, border closings
    • h2 Key Events/h2

    US futures for the Dow Jones, S&P, NASDAQ and Russell 2000 wavered between losses and gains on Tuesday, while European shares steadied}}, rebounding after their worst selloff in nearly two months on Monday. The resumption of Brexit negotiations and passage by Congress of the $900 billion, US stimulus package yesterday evening offset fears of the new variant of the coronavirus that has appeared in the UK.

    The dollar rose for a third straight day. Gold and oil dropped.

    h2 Global Financial Affairs/h2

    US lawmakers overwhelmingly passed the long-contested stimulus package on Monday night. While the New York Times characterized the bill as “huge coronavirus relief,” it was scaled back from the $2.5 trillion aid package originally sought by Democrats.

    The continued slide of stocks on Wall Street yesterday as well as this morning's early dip in US contracts suggest the stimulus is likely already all priced in.

    While the Stoxx Europe 600 Index was 1.1% higher earlier today, it's now lower but remains in the green at time of writing. The pan-European index's gains are being led by banks and travel firms, suggesting hope for life after lockdowns. Nonetheless, the benchmark is still 1.2% lower than where it stood at Friday’s close.

    As such, the European gauge pared less than half of yesterday’s selloff, demonstrating that the new strain of COVID and the wave of stricter lockdowns and border closings have left their mark. The UK's FTSE 100 underperformed the major European indices, and the pound weakened for the third day, albeit because of still undecided issues surrounding a Brexit deal or perhaps more likely the new virus mutation. Some would find that ironic after the UK was the first country to begin vaccinating its citizens.

    We, however, are impressed by sterling’s resilience, and have previously demonstrated it could rally much, much higher...under the right conditions. Note yesterday’s profound rebound, which trimmed a 2.5% plunge, turning it into a mild 0.4% dip.