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This week in the markets there is very little scheduled news on the economic calendars that may move the markets, so we are seeing markets move on the macro themes of US. Stimulus, COVID-19 vaccinations and EU/UK trade deals post Brexit.
A couple of points in the calendar today around US Home Prices will indicate whether the pent-up demand for US homes is still there and whether the lending is available to fund higher prices. There had been a mass movement of people from urban to suburban areas when the seriousness of the pandemic became apparent and with the continuation of the COVID-19 situation, today’s figures will go some way to revealing if that trend continues.
This evening we also get the API Crude Oil stock figures, which over the last 2 months have seen a build as demand remains low. Crude oil price action on the charts has been going sideways for the best part of a month now, capped by the $50 and supported by $45 with very little sign of bullish momentum increasing. Next week we have the OPEC+ decision on production increases, which may add over to supply pressures on the price of a barrel of oil at the start of the new year.
In the US last night, the House of Representatives voted 275-134 in favour of increasing the direct payment VOVID-19 relief cheques from $600 to $2000 and now this key addition to the relief bill will be voted on by the US Senate. The key sticking point for the Republicans within the Senate is that the increase in cheques would cost $464billion more to the US taxpayer. Individuals who earn up to $75,000 annually are eligible with married coupled filing jointly who have an income of $150,000 receiving the full payment.
Big movers on the back of the news out of the USA were in the global equities, with the Nikkei225 (Jp225Mar21) adding more than 700 point and rising above the 27,000 level for the first time since April 1991.
The US indices all had a good day yesterday and look set to continue higher today as price action across the major stock markets moves into fresh all-time highs. The Nasdaq (UsaTec) has been the standout winner in 2020 and is approaching 13,000 at a very bullish rate. The price for the index is currently 12,902 and a 100-point move would be half of what happened during the trading day yesterday. Big movers within the indices were Amazon (+3.51%), Facebook (+3.59%) and Apple (+3.58%) and the CBOE volatility index decreased by -0.2% signalling the grind higher is set to continue.
There is some business to be done by fund managers this week as they rebalance their portfolios ready for the new year and at some point, traders will look to book profits so jumping in at these levels is never a great idea and waiting for a pullback would be more advisable.
The GBPUSD is looking likely to undo yesterday’s bearish day on the back of a weaker US dollar. In last night’s market wrap I mentioned that the City of London was not part of the Trade Deal agreed upon by the EU and UK on Christmas eve and that the City will be required to keep an equivalence with the EU institutions. Chancellor Rishi Sunak told news outlets that “now we have left the European Union, we can do things a bit differently.” The chancellor then went on to say that the government were “examining how we can make the City of London the most attractive place to list new companies anywhere in the world”.
The FTSE (UK100) has not been able to make all-time highs this year but today opens up very bullish for the London session and seeks to make a new high for December above 6640 having gapped up on the open.
