US Market Open: Biden to unveil new stimulus package

• US markets remain close to recent record highs as investors prepare for speeches from president-elect Joe Biden and Federal Reserve chair Jerome Powell.
• President Donald Trump faces a trial in the Senate after being impeached by the House yesterday.
• European markets are in positive territory at midday, with the FTSE 100 up 0.7%.
• The German economy performs better than expected, France hopes to bounce back this year, while the UK aims to launch a 24/7 vaccination programme.
• In commodities, oil prices take a breather from the recent rally.

US markets hover close to record highs

US markets are expected to open higher today, hovering close to the record highs that were seen last week.

The S&P 500 is called to open slightly higher today at 3816.1 after closing at 3814.0 yesterday.

The Dow Jones is set to open 0.2% higher at 31148.0 from 31076.5 at the last close.

Start trading the opportunities with indices today.

President-elect Biden to outline fiscal stimulus plans

President-elect Joe Biden will make a speech later today to outline plans for a huge fiscal stimulus bill to help the US economy recover from the pandemic.

Reports suggest the new fiscal stimulus could be worth anywhere between $1.3 trillion to $2 trillion and include direct payments of up to $2000 to hard-hit citizens. A $900 billion package was recently agreed by Democrats and Republicans, but Biden has described this as a down payment ahead of his inauguration. That included direct payments of $600 to citizens after Democrats were unsuccessful in their attempts to raise the figure.

Having now won control of Congress following the Georgia run-off races, Biden is expected to push ahead with a sweep of Democrat policies, but he is keen to win the backing of Republicans to build on the bipartisan mood that has struck both parties during Donald Trump’s final days in office. That may dissuade Biden from trying to ram through too much straight away and approach it in phases to garner the support of both Democrats and Republicans. He is expected to focus solely on coronavirus-relief measures at first and not to mix it with other policies to do with matters like healthcare or infrastructure spending, which he is expected to pursue later.

On top of larger cheques, reports suggest Biden could look to increase support for minority groups and billions of new funds to accelerate the country’s vaccination programme. State and local governments, which also fund the likes of schools and hospitals, are also set to receive more money.

Trump becomes first president to be impeached twice

Donald Trump has become the first US president to be impeached twice after 10 Republicans partnered with the Democrats to decide he had incited violence ahead of the violent scenes at the US Capitol building last week.

The House of Representatives voted 232-197 in favour of the article of impeachment that represents a formal charge against the president for ‘incitement of insurrection’.

The impeachment is unlikely to remove Trump from office before January 20, when Joe Biden is inaugurated, but Democrats are hoping the impeachment will hold him to account and possibly prevent him from running for president again in 2024.

This will trigger a trial in the Senate and a two-thirds majority would have to vote against Trump in order to remove him and convict him of the charge. That means around 17 Republican Senators would need to turn on Trump for it to be successful.

European markets in positive territory at midday

The Euro STOXX Index traded 0.3% higher at midday at 3628.5 from 3619.3 at the end of play on Wednesday.

France’s CAC 40 was slightly higher at 5669.5 from 5666.0 at yesterday’s close.

Germany’s DAX was also up at 13964.0 from its last closing price of 13957.5.

City Index analyst Fiona Cincotta has a technical look at the DAX and how it could respond to GDP data and Biden’s speech later today.

Meanwhile, over the Channel, the FTSE 100 was up 0.7% at 6797.3 from 6749.3 at Wednesday’s close.

In today’s Top UK Stocks to Watch, Whitbread suffers during the pandemic, Tesco delivers ‘market-leading’ sales over the Christmas period, AB Foods warns Primark could lose billions in sales, while Just Group shares jump after it reports strong growth. It has been a particularly busy day for the FTSE 250, with a number of companies stating they have performed better than expected.

German economy collapses but fares better than during financial crisis

The German economy shrank by 5% in 2020, according to preliminary numbers released earlier, representing a smaller contraction than expected. A Reuters poll suggested the contraction would be 5.1%.

While a steep fall, it is not as bad as the 5.7% decline reported in 2009 during the financial crisis.

Notably, Germany could be one of the stronger economies in the eurozone. Whilst it is one of the first preliminary numbers to be released, countries like France and Italy are expecting their economies to contract by around 9% in 2020 – possibly highlighting very different performances across the bloc.

France aims to grow economy by 6% in 2021

Meanwhile, in the wake of the German data being released, France’s finance minister Bruno Le Maire said the economy could grow 6% in 2021 so long as the economy can start to recover in the second half of the year.

‘I am really quite confident that the second part of 2021 will be good for the French economy,’ he told Reuters.

He also said that resolving the country’s trade dispute with the US would be a top priority once Biden took office, after Trump imposed tariffs on French goods as part of an ongoing row with individual countries and the EU over a digital services tax that targets Big Tech in the US and subsidies for the aircraft industry.

UK targets 24/7 vaccinations as latest wave proves more deadly

The UK is hoping to vaccinate people 24 hours a day, 7 days a week as deaths reached a new daily high on Wednesday.

A total of 1564 people died within 28 days of a positive coronavirus test yesterday. Yvonne Doyle, the medical director for Public Health England, said ‘today we have reported the highest number of deaths on a single day since the pandemic began’.

‘There have now been more deaths in the second wave than the first,’ she added.

As the new variant continues to cause chaos, prime minister Boris Johnson said he wants 24/7 vaccinations taking place as quickly as possible. Right now, it is not possible because there are constraints on supply, but the arrival of 2 million AstraZeneca doses a week from around mid-February is expected to bolster supplies.

The country is hoping to vaccinate 2 million people per week to allow all vulnerable people to be protected by mid-February and so ‘all adults’ can be offered a jab by the Autumn. Pharmacies are expected to start administering vaccines from today, including major high street brands like Superdrug and Boots.

Forex: Dollar in focus ahead of Biden and Powell speeches

The dollar is in focus today ahead of Biden’s speech and the update from the Fed chair Jerome Powell.

GBP/USD was up 0.1% at 1.36505 at midday compared to 1.36376 at the close of trade on Wednesday.

EUR/USD traded broadly flat at 1.21536 compared to the closing price yesterday of 1.21578.

Meanwhile, EUR/GBP was down 0.1% at 0.89033 – its lowest level since late November - after ending yesterday at 0.89149.

City Index analyst Joe Perry has a look at US dollar pairs and how they could react ahead of today’s speeches from Biden and Powell.

Start trading the opportunities in the forex market today.

Commodities: Oil takes a breather

Oil prices continue to take a breather following the recent rally. Production cuts by Saudi Arabia, bigger drawdowns in inventories in the likes of the US and China, and buoyant price forecasts from major US banks have all been providing support to prices over the last week or so. That pushed prices to an 11-month high, but prices fell yesterday and look set to fall further today as coronavirus fears come back into play.

Brent traded at $55.78 at midday, down from $56.00 at the end of play yesterday, while WTI fell to $52.77 from $52.90.

The EIA natural gas storage change for the week to January 8 will be published at 1700 GMT.

Start trading the volatility in oil prices today.

Gold was flat at midday at $1844 after ending yesterday’s session at $1845.

Start trading gold and other precious metals today.

Market-moving events in the economic calendar

The economic calendar focuses on the US this afternoon, with continuing and initial jobless claims due at 1330 GMT. Jerome Powell, the chair of the Federal Reserve, will make his speech at 1730 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.