European Market Open Brexit vaccine hopes to push indices higher

• European indices are set to open higher this morning, as hopes for a Brexit deal improve and markets prepare for the EU to begin rolling-out its first coronavirus vaccine before the end of the year.
• The Bank of England takes centre stage today, with the central bank expected to hold rates and its monetary policy steady.
• In forex, both the pound and the euro have rallied to their highest level against the dollar since early 2018.
• In commodities, oil prices have hit nine-month highs as the dollar weakens and US stockpiles fell more than expected.

FTSE 100 rises despite stronger pound

The FTSE 100 is set to open 0.1% higher at 6583.0 on Thursday morning, weathering the impact of a stronger pound on the index of overseas earners, after ending the trading session yesterday at 6574.3

European indices: DAX to open at highest level since February

The Euro STOXX Index is called to open 0.1% higher at 3552.5 from 3548.2 at the end of play on Wednesday.

Germany’s DAX is set to open 0.1% higher at 13604.8 from 13586.0 at yesterday’s close. The index is set to open at its highest level since late February as it verges on recovering all the pandemic-induced losses it has racked-up this year.

Meanwhile France’s CAC 40 is expected to open 0.3% higher this morning at 5563.0 from 5544.8.

Start trading the opportunities with indices today.

Will there be a Brexit deal this week?

Brexit rumbles on but beliefs that a deal could be agreed soon have increased in recent days. UK MPs are expected to be recalled from the Christmas break next week to scrutinise any deal that is brokered, with prime minister Boris Johnson stating there was ‘every hope, every opportunity’ for a deal. Meanwhile, the president of the European Commission, Ursala von der Leyen, said the two sides were now on a path to an agreement, albeit a narrow one.

Some progress appears to have been made on some of the three major sticking points, with von der Leyen stating issues over maintaining a level-playing field and governance were ‘largely being resolved’. That leaves fisheries as the main point of contention, with France leading the calls for the EU to maintain rights to the UK’s fishing waters beyond December 31.

UK and US in talks over mini trade deal

The UK and the US are looking to sign a mini trade deal that aims to reduce tariffs on trade between the two countries, according to the BBC, citing Robert Lighthizer, the top trade aide to president Donald Trump. The UK recently announced it would suspend retaliatory EU tariffs imposed on US aircraft parts as part of a dispute over Airbus and Boeing, but Lighthizer said the UK would need to do more to secure a deal.

Bank of England expected to hold steady

The Bank of England’s Monetary Policy Committee will meet to unveil their final interest rate decision for 2020, with markets largely expecting it to hold steady after expanding its QE programme in November. Rates and monetary policy are expected to be maintained, putting the focus on what the central bank could do next year. The fact Brexit remains unresolved and the UK economy’s fate for 2021 remains clouded means there is less clarity for the bank to work with.

City Index analyst Fiona Cincotta considers what to expect from the BoE meeting and how ongoing Brexit talks factor-in, whilst looking at how GBP/USD could come into play today.

Germany to begin vaccine rollout on December 27

Germany intends to begin rolling-out the vaccine developed by Pfizer and BioNTech on December 27, according to the Berlin city government. EU member states are still waiting for the European Medicines Agency (EMA) to approve any coronavirus vaccines, and Germany has been leading the charge to get the regulator to move quickly. The EMA plans to make its decision on the vaccine on December 21 after bringing the date forward earlier this week and the announcement by Germany suggests there is little doubt it will be given the green light.

Novartis to buy Cadent for up to $770 million

Swiss giant Novartis said it has agreed to buy US neuroscience firm Cadent for up to $770 million. An upfront payment of $210 million will be made with $560 million in milestone payments.

Rio Tinto promotes CFO Stausholm to CEO

Mining giant Rio Tinto said it will appoint its chief financial officer Jokob Stausholm as the company’s new chief executive from the start of 2021.

TalkTalk recommends takeover offer

TalkTalk said it is recommending a takeover offer to take the company private by Toscafund Asset Management today, after Sky News reported a £1.1 billion deal on Monday. TalkTalk also posted first-half figures that showed revenue fell to £740 million from £792 million, causing it to slip to a £3 million pretax loss from a £1 million profit the year before. No dividend was paid, but it said it would reconsider an interim payout depending on how the deal progresses. It also said chief financial officer Kate Ferry is stepping down to be replaced by Phil Eayres.

Serco expects revenue to grow 19% in 2020

Serco said it expects annual revenue to grow 19% to £3.9 billion in 2020, with organic growth of 16%. Underlying trading profit is to grow by 35% to around £160 million to £165 million. Serco said it expects both to move ‘slightly higher’ in 2021. It also announced that Angus Cockburn will retire as chief financial officer in April 2021, when he will be replaced by Nigel Crossley. Serco has also signed a new £250 million contract to deliver prison services in Australia.

Avon Rubber hit by contract delay

Avon Rubber said a contract for body armour plates from the US Defence department has been delayed after products failed to meet standards during testing. Avon Rubber was expecting to sign the deal in the first half of its 2021 financial year but said this now won’t happen until the first half of 2022. Avon Rubber said trading had otherwise been in line with expectations since it reported annual results earlier this month. It also said it has received its first orders under a $33 million deal from NATO.

Forex: Dollar slips to fresh lows against sterling and the euro

Both sterling and the euro have continued to climb against the dollar, hitting their highest levels against the greenback for over two-and-a-half years.

GBP/USD traded 0.3% higher this morning at 1.35532 – its highest level since May 2018 – after ending yesterday’s session at 1.35093.

EUR/USD was up 0.8% at 1.22296 – its strongest since April 2018 – from 1.21996 at Wednesday’s close.

Meanwhile, EUR/GBP traded at 0.90233, a smidgen lower from 0.90306 at the close on Wednesday.

Start trading the opportunities in the forex market today.

The most drastic movements in the currency markets this morning, according to data from Reuters, are as follows:

FX Pair	Latest Price	% Change
GBP/JPY	139.99	0.23%
USD/JPY	103.27	-0.21%
USD/INR	73.434	-0.19%
USD/RUB	72.9965	-0.17%
EUR/JPY	126.3	0.11%

Commodities: Oil prices hit nine-month high

Oil prices have continued to find higher ground, with Brent breaching the $51 mark for the first time since oil markets plunged in February as the pandemic began to take its toll on demand. The move higher was driven by US crude stockpiles coming in lower than expected and on the weak dollar, which typically provides a boost to dollar-priced commodities.

Brent traded at $51.60 this morning, 1% higher than $51.07 at the Wednesday close, while WTI sat at $48.54, 1.1% above its closing price of $48.01.

Start trading the volatility in oil prices today.

Gold traded at $1870 per ounce, up 0.3% from $1864 at the close yesterday.

Start trading gold and other precious metals today.  

Market-moving events in the economic calendar

There is the Swiss National Bank makes its interest rate decision at 0830 GMT ahead of a press conference at 0900 GMT. There is then CPI data from the eurozone at 1000 GMT.

The main event starts at 1200 GMT, when the Bank of England is expected to keep interest rates flat.

In the afternoon, attention is on US housing starts, building permits, and jobless claims at 1330 GMT.

Then we head to Australia, where it will reveal its trade balance at 2145 GMT, and then Japan’s CPI numbers at 2330 GMT.

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.