US Market Open: Biden bounce pushes stocks to fresh highs

• US markets closed at record highs yesterday and expected to climb even higher today as Joe Biden launches new measures to step up the fight against coronavirus.
• European markets are largely trading higher at midday ahead of the ECB meeting and a summit of EU leaders that are also looking to ramp-up the battle against the pandemic.
• In forex, sterling climbed to new highs against both the euro and the dollar.
• In commodities, oil prices dipped as US oil inventories unexpectedly rose yesterday.

US markets to open at fresh record highs

US stock markets hit record highs yesterday as Joe Biden was sworn-in as president, as markets prepare for a new wave of fiscal stimulus to get the world’s biggest economy going again after being ravaged by the coronavirus pandemic.

The Biden bounce is expected to continue today to push markets to new record highs.

The S&P 500 is called to open 0.4% higher today at 3861.4 from 3847.9 at the close of trade yesterday.

The Dow Jones is set to open 0.3% higher at 31261.5 from 31171.0 at the end of play on Wednesday.

Start trading the opportunities with indices today.

Biden to tackle coronavirus pandemic in first day in the White House

Joe Biden is expected to sign a number of executive orders during his first full day in the White House in order to ramp-up the fight against coronavirus.

The president is expected to sign up to 10 orders today, including ones to funnel disaster funds to help schools reopen, introducing new rules to make masks mandatory on public transport, and establishing a COVID-19 board to take ownership for vaccine supplies and testing.

That follows on from the 15-or-so executive orders Biden signed yesterday soon after he was inaugurated as he started to reverse the Trump administration’s policies. That included orders to rejoin the Paris climate accord, halt the withdrawal from the World Health Organisation, revoking the Keystone XL pipeline permit, unwinding certain travel bans, cutting-off funding for the border wall with Mexico, and making masks mandatory on federal property. He has also started a process to extend a suspension on evictions until the end of March and asked for student loan repayments to be suspended until the end of September.

Biden is expected to outline his policies in a wide range of areas over the next 10 days, including on healthcare, immigration and the economy. He has already put forward a $1.9 trillion fiscal stimulus bill forward that looks likely to pass Congress now that it is under the control of the Democrats and because some Republicans have shown a willingness to work with the new president.

The package – considerably larger than previous ones – has signalled that the US will do whatever it takes to support the economy during the pandemic and supports plans to get it back up and running with a better and faster vaccination programme. Janet Yellen, Biden’s pick for Treasury secretary, said earlier this week that politicians needed to ‘act big’ with spending plans and worry about the debt pile later, sending a signal that the US intends to spend its way out of any potential recession.

European markets trading higher at midday

All eyes are on the ECB early this afternoon, while EU leaders are also holding a summit later today to discuss how the bloc should respond to the coronavirus pandemic.

The Euro STOXX Index traded 0.3% higher at midday at 3642.5 from 3631.2 at the close of the last trading session.

France’s CAC 40 was down 0.4% at 5624.3 at midday from 5646.5 at the end of play yesterday.

Germany’s DAX was up 0.3% at midday at 13993.0 after ending yesterday at 13944.6.

Meanwhile, over the Channel, the FTSE 100 was up 0.1% at midday at 6754.5 from 6746.0 at Wednesday’s close.

In today’s Top UK Stocks to Watch, Sage Group reports further revenue growth, Ibstock says it will beat expectations, 4imprint’s recovery gains momentum, and Pets at Home continues to benefit from being an essential retailer.

ECB preview: no surprises expected

The European Central Bank is in focus today. The ECB is expected to make its interest rate decision at 1245 GMT and make a statement at 1330 GMT. No surprises are expected after the central bank increased and extended its Pandemic Emergency Purchase Programme at its last meeting in December.

City Index analyst Fiona Cincotta says the central bank is in wait and see mode in her ECB preview.

Markets will be looking to gain an insight into the health of the bloc’s economy and how open it is to introducing further stimulus in the future, especially as countries introduce new and tighter lockdown restrictions and start to suffer supply problems from vaccine makers.

European Summit to discuss coronavirus pandemic response

European leaders will meet today to discuss how the bloc should tackle the growing challenges of the coronavirus pandemic. The meeting will start at 1700 GMT.

The EU is keen for the bloc to take a coordinated and synchronised approach to the pandemic – whether that be on vaccines or travel restrictions – in the hope that the whole group can recover together. On Tuesday, the European Commission said the EU is aiming to have at least 70% of adults vaccinated by the summer despite a rather slow start across the bloc.

Leaders will undoubtedly discuss news that Pfizer is to delay deliveries of its vaccine developed with BioNTech whilst it scales up manufacturing, threatening to derail vaccination programmes. The pair said they need to cut production in Belgium this month in order to scale-up output in Europe in the coming months.

Ursala von der Leyen, the president of the European Commission, also urged yesterday that countries needed to work together on border closures and other measures after Germany warned it may need to tighten its own border controls.

UK consumer spending hit by latest lockdown

UK consumer spending was down 35% from its pre-pandemic levels in the week to January 14, new data from the Office of National Statistics revealed.

The decline in spending was in line with the week before, when a new national lockdown was introduced that forced the high street and most shops to close again. However, it compares starkly to the growth reported over the Christmas period when lockdown rules were eased.

Forex: new highs for sterling

GBP/USD was trading 0.5% higher at midday at 1.37283 – its highest level since April 2018 - from 1.36553 at yesterday’s close.

EUR/GBP was down 0.2% at 0.88461 – its lowest level since May - from 0.88657 at yesterday’s close.

Meanwhile, EUR/USD traded at 1.21449 at midday, up 0.3% from 1.21059 at the end of play yesterday.

Start trading the opportunities in the forex market today.

Commodities: Oil prices dip on US inventory build

Brent traded at $55.58 per barrel at midday, slightly down after ending yesterday at $55.69, while WTI edged lower to $52.88 from $52.95.

Oil prices have recently found support from incoming Biden administration as expectations grow that the new president will introduce a slew of new fiscal stimulus to get the world’s largest economy going again.

However, WTI was in focus yesterday when the American Petroleum Institute revealed US crude oil inventories increased by 2.6 million barrels in the week to January 15 – a starkly different result from the 1.2 million barrel decline expected by markets.

Inventories have been in decline for several weeks, so the unexpected jump has revived fears that demand has taken another hit during the pandemic. Eyes will be on the US Energy Information Administration’s numbers on Friday, which will provide an insight into whether the API rise was a blip or represents a change in market fundamentals.

Start trading the volatility in oil prices today.

Gold was trading at $1870 per ounce at midday, broadly flat from $1872 at the last close.

Start trading gold and other precious metals today.

Market-moving events in the economic calendar

The ECB interest rate decision at 1245 GMT is the headline event in the economic calendar today, with the central bank due to make a statement at 1330 GMT. Eurozone consumer confidence figures will come out after at 1500 GMT.

Attention turns to the US this afternoon, with initial and continuing jobless claims due at 1330 GMT, coinciding with housing starts, building permits and the Philadelphia Fed manufacturing survey.

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.