Financial markets roundup: this week has been prone to optimism amid thin year-end trading. The U.S. stimulus bill and the epidemic continue to be important drivers of major assets. U.S. President Donald Trump boosted risk markets when he signed a stimulus bill into law earlier this week, but the senate majority leader’s refusal to hold a separate quick vote on a $2,000 check and the further severity of COVID-19 capped the rally in risky assets.
Currency markets: The dollar continued its slide this week on the prospect of additional U.S. stimulus, with the DOLLAR index.DXY opening at 90.28 and closing at 89.95, having hit a low of 89.52. The pound, the euro and other major non-U.S. currencies rose. Sterling hit a high of 1.3686 to the DOLLAR, its highest level since May 2018, particularly after parliament swiftly passed legislation on the brexit deal.
Commodity markets: Spot gold briefly broke through the $1,900 barrier at the beginning of the week, but later fell back and has since hovered below this critical level. The dollar’s decline provided support for gold, but a market dominated by optimism curbed safe-haven demand for the metal. Gold hit the 1900 level again over the weekend, but by the close it was back at $1,898.27 an ounce.
Stocks: Despite this week’s risk factors, the overall optimism in the market helped Wall Street hit new highs even in light year-end trading. For the year as a whole, APPL was the dow’s best performer, up more than 80 percent, and Boeing was the worst performer, down nearly 34 percent. The NASDAQ, led by technology stocks, surged 43.64 percent for the year, while the S&P 500 rose more than 16 percent.
The US Stimulus bill: There are still setbacks after Trump signed it
There was a breakthrough early in the week on the long-awaited US stimulus bill. US President Donald Trump has signed into law a $2.3 trillion coA bailout bill ($900 billion) and the 2021 fiscal year budget ($1.4 trillion), the White House said in a statement on Dec 27.
The two bills, totaling $2.3 trillion, are the result of months of intense negotiations between lawmakers from both parties in Congress. Two bills passed by congress on December 21 include $1.4 trillion in government spending appropriations in addition to $900 billion in bailout funds to cushion the economic impact of the outbreak. The government had been relying on a temporary funding authority that expired Monday. Mr Trump insisted last week that he opposed the bill, saying it lacked support for the American people themselves.
The news sent gold soaring above the $1,900 mark. It peaked at $1,900.19 an ounce.
“Investors are quite optimistic about fiscal and monetary support from governments around the world,” UBS analyst Giovanni Staunovo said last week. Gold, considered a hedge against inflation and currency depreciation, is up more than 23% this year, helped by massive stimulus measures.
Jigar Trivedi, commodities analyst at Anand Rathi Shares, a Mumbai broker, said: “The market is hoping that the stimulus package will be passed and that should support gold higher.”
But then the stimulus bill faltered again. On The evening of December 28 local time, the Democratic-led House of Representatives voted 275-134 to approve a bill that would increase the new Coronave-relief package for those earning less than $75,000 a year from $600 to $2,000.
The bill then goes to the Republican-controlled Senate, where a two-thirds majority is needed to pass it. But Republican lawmakers have argued that increasing the payout would lead to an increase in the deficit.
Senate Majority Leader Mitch McConnell said On Thursday that a bill issuing $2,000 in house checks would not pass the Senate quickly.
Senate Minority Leader Charles Schumer had sought an anonymous vote on December 29 to pass a $2,000 cash handout to fight the epidemic, but McConnell refused. McConnell noted that the Senate will address three of President Trump’s demands this week, including the amount of individual bailout subsidies, election fraud, and a bill exempting technology companies from liability for user content.
Mr. Trump flew back to Washington on Thursday, a day ahead of schedule. He reportedly plans to continue fighting congressional votes on a defense bill and stimulus checks, and to try to reverse his loss in The November election.
Meanwhile, investors are awaiting a January 5 runoff in Georgia that will determine which party will control the U.S. Senate, where more stimulus measures are expected from the Democratic-controlled house and Senate.
Avtar Sandu, senior commodity manager at Phillip Futures, said in a report that fiscal policy is likely to remain loose in the Democratic-controlled Senate, which will weigh on the dollar and favor precious metals.
Oanda analyst Edward Moya said in a research note that the final number of seats in the U.S. Senate controlled by both parties, as well as the bailout measures taken after Biden takes office, will be the next factor affecting gold prices.
Europe: Britain’s formal exit from the Eu-China Investment Treaty is complete
In Europe, the UK officially left the European Union on December 31 after the end of the brexit transition period. To the relief of investors, Britain and the EU had reached a trade deal earlier, and the British parliament, meeting in emergency session on December 30, rushed to ratify the 1,000-plus page agreement in one day, avoiding the chaotic scene of a no-deal Brexit.
Speaking in Parliament, Mr Johnson praised the “stunning speed” of the TRADE deal and said it “demonstrates how Britain can be both a European and a sovereign nation”. “We will open a new chapter in our national story, forging free trade agreements around the world and reaffirming to the world that Britain will always be a free and outwward-looking force,” he said. “Now with this law, we will be a friendly neighbor and the best friend and ally the European Union could have.”
Sterling has rallied markedly on the news, hitting as high as 1.3686 this week, its highest level since May 2018.
Meanwhile, another important deal with the European Union was completed this week. On the evening of December 30, Leaders of China and the EU held a video meeting and jointly announced the conclusion of china-eu investment agreement negotiations as scheduled. After that, China and the EU will push for the early signing of the Agreement and the early completion of their respective internal ratification procedures.
Reuters noted in a subsequent report that the conclusion of the agreement was announced at a video meeting between Chinese and European leaders, which sent a significant signal of China’s firm determination and confidence in further opening up.
“This agreement is an important milestone in our relationship with China.” The agreement will provide eu investors with unprecedented access to the Chinese market and make the operation of European companies more certain and predictable, Von der Leyen said in a video meeting between Chinese and European leaders on Tuesday.
“China is committed to providing an unprecedented level of market access to EU investors and to providing certainty and predictability in the operations of European companies,” the European Council said in a press release.
“The agreement will also significantly improve the level playing field for EU investors by clearly stipulating the obligations of Chinese state-owned enterprises, banning forced technology transfers and other distortions, and increasing transparency of subsidies,” the statement said.
The Chinese side stressed that the two sides have reached agreement on the list of contentious issues, which were previously proposed by the US side. The United States and China have been fighting a trade war for more than two years, and the dispute has spilled over into technology, finance and other areas.
COVID-19 progress: Vaccine race against COVID-19
This week’s GLOBAL COVID-19 outbreak, led by the United States, remains severe. Data from the COVID-19 tracking program show that the United States has set a record for COVID-19 hospitalizations for four consecutive days. More than 12,370 people were hospitalized with the new coronavirus on December 31, the fourth consecutive day that the number broke records.
According to Johns Hopkins University, novel Coronavirus cases in the United States exceeded 20 million on New Year’s Day, with 20,007,149 infected cases.
On Friday, California reported 585 new COVID-19 deaths in 24 hours, the state’s highest single-day death toll to date. In New York State, 166 people died on Thursday, the deadliest single day since May 12.
An epidemic in domestic, according to China’s national WeiJianWei latest bulletin, on January 1, 2021, 24, 31 provinces (autonomous regions and municipalities directly under the central government) and 22 cases of the new cases of the xinjiang production and construction corps report, including overseas importations 14 cases (Shanghai 4 cases, 3 cases of tianjin, guangdong 3 cases, 1 case in liaoning, 1 case of fujian, shandong in 1 case, shaanxi 1 case), 8 cases of local cases (liaoning 7 cases, 1 case in Beijing); No new deaths; One new suspected case was imported from abroad (in Shanghai).
Novel Coronavirus, reported last week in UK, has an update this week. The COVID-19 virus, which emerged in the UK, has recently spread to other countries, including Denmark, Germany, Switzerland, France, Belgium, Australia, the Netherlands, Japan, Spain, Canada and South Korea. According to statistics, novel Coronavirus infected patients have been found in more than ten countries. On December 29 local time, Colorado health officials reported the first case of a novel coronavirus infection in the state, the first such case in the United States. The CENTERS for Disease Control and Prevention (CDC) subsequently issued a statement saying that more novel coronavirus infections with the mutation may be discovered in the coming days.
A new study released by Imperial College London shows that novel mutation coronavirus spreads quickly among all ages, rather than among young people as previously thought. The novel Coronavirus mutation can increase the “basic infectious number” of the virus, that is, the average number of infectious persons per infected person by about 0.4 to 0.7.
Meanwhile, the race is on for a vaccine against the epidemic. According to data released by Duke University, about 7 billion doses of COVID-19 vaccine have been subscribed globally by December 18, of which more than 4 billion doses have been subscribed in developed countries, more than 1.1 billion doses in upper and middle income countries, more than 1.8 billion doses in low and middle income countries, and none in low income countries. The United States, The United Kingdom, Canada and the European Union ordered large quantities and multiple vaccine candidates simultaneously. Orders are not for finished products that have already been produced, but for vaccine manufacturers’ projected capacity over time. If all procured vaccines are delivered, EU countries can vaccinate all their populations twice, Britain and the US four times and Canada six times.
On 30 December, UK regulators approved the use of Astrazeneca/Oxford COVID-19 vaccine. Compared with the previously approved Pfizer vaccine, the Oxford vaccine only needs to be kept at a temperature of 2-8 degrees Celsius and is easy to transport, so it could be quickly rolled out to community clinics and nursing homes. Matt Hancock, the UK health secretary, said the approval marked a “way out” to contain the COVID-19 outbreak.
Janet Mui, investment director with wealth managers Brewin Dolphin, said it was a turning point in the fight against the pandemic: “It is critically important that the vaccine is superior to its peers in terms of storage, distribution and affordability, so it could speed up global vaccination efforts. The British government has ordered 100 million doses in advance, so large numbers of people will be able to receive treatment relatively quickly. The long shelf life and easy retention of the vaccine will make the vaccination more effective.”
“The vaccine is much cheaper than similar vaccines, so it will ensure fairer access to vaccination, especially in developing countries. As the fight intensifies, the prospect of more rapid and widespread vaccination will give the market confidence.”