The Brexit transition is over, the US is about to get a new president, and the primary focus remains on how quickly the global economy will be able to recover from the coronavirus pandemic. It may be a new year for markets but there are still some familiar issues on the table, with new ones undoubtedly waiting around the corner.
Forex.com analyst Joe Perry has a look at what is in store for the first week of 2021.
FTSE 100: positive start to 2021
European markets mostly push higher
France’s CAC 40 is set to open broadly flat at 5592.1 from 5590.8 at the last close.
The UK will be the first country to start rolling-out a vaccine developed by AstraZeneca and Oxford university today, after approving it for emergency use last month. Around 530,000 doses of the vaccine will be ready today and distributed by six hospitals. The UK has bought 100 million doses and hopes it can significantly accelerate its vaccination programme over the coming months.
The vaccine is regarded as a game-changer for the UK and other potentially other countries as it is cheaper to produce and easier to store and transport compared to the Pfizer-BioNTech vaccine that is already being used. BioNTech chief executive Uger Sahin warned over the weekend that there could be supply problems ‘because there’s a lack of other approved vaccines and we have to fill the gap with our own vaccine’.
Still, the introduction of a second vaccine has done little to allay fears that cases and hospitalisations are getting out of control. Prime minister Boris Johnson warned regional restrictions in England are ‘probably about to get tougher’ over the weekend, with over 50,000 new cases reported on Sunday, while the opposition Labour party has called for a new national lockdown to be imposed within 24 hours.
The Washington Post has released a recorded phone call between US president Donald Trump and Georgia’s secretary of state Brad Raffensperger, during which the president said he wanted to ‘find’ enough votes so that Joe Biden’s victory in November could be overturned.
The election result has split Republicans, with many accepting the Democrats won. Still, a group of Trump’s Republican allies today are expected to formally object to the formal certification of Biden’s win, which is due to happen on Wednesday.
The certification will be one day after the crucial run-off elections in Georgia for two Senate seats on Tuesday that could see control of the Senate change hands. Republicans are aiming to maintain their slim majority while the Democrats will be able to take control if they can win both seats.
Forex.com analyst Matt Weller has a look at how US-China relations will fare in 2021.
US casino operator MGM Resorts is looking to buy UK bookmaker Entain, formerly known as GVC Holdings. MGM has made a bid for the owner of Ladbrokes with the financial help of IAC Group. Entain released a statement this morning that said the offer received ‘significantly undervalues’ the business and has asked MGM for more detail on the rationale for the combination of the two businesses.
Fiona Cincotta looks at book maker and top 2020 FTSE performer Flutter in light of possible further consolidation in the industry: Two trades to watch: oil ahead of OPEC, FLTR after MGM Resorts Entain bid
Fiat Chrysler and PSA Group to vote on mega-merger
Shareholders of Fiat Chrysler and PSA Group are to vote on the proposed mega-merger of the two companies today. The deal is expected to be approved and would combine 14 car brands under one roof, creating the fourth largest carmaker in the world.
GBP/USD traded at 1.36843 in early trade, 0.1% higher from 1.36659 at the last close. Having ended 2020 at a new high, cable has continued to push higher and now sits at its highest level since May 2018.
Meanwhile, EUR/GBP traded 0.2% higher at 0.89554 from 0.89391 at the end of 2020.
Commodities: OPEC+ to hold first meeting of 2021
OPEC+ are meeting today to discuss how to balance global supply and demand in its first meeting of the year. The group had to cut production by record amounts in 2020 in response to the coronavirus pandemic wiping-out demand. OPEC secretary Mohammad Barkindo said on Sunday that the ‘outlook for the first half of 2021 is very mixed and there are still many downside risks to juggle’.
The group is expected to steadily raise output this year by 2 million barrels per day, but there is thought to be disagreement over whether this is needed in the current climate.
Fiona Cincotta looks at WTI technicals: Two trades to watch: oil ahead of OPEC, FLTR after MGM Resorts Entain bid
Market-moving events in the economic calendar
PMIs dominate the economic calendar today. PMIs for individual European states are being released this morning before the eurozone PMI comes out at 0900 GMT. The UK’s PMI is due at 0930 GMT. Canada’s PMI is due at 1430 GMT, followed by the US at 1445 GMT.