European Market Open: Looking beyond US Capitol riots

Market chart showing uptrend
Josh Warner
By :  ,  Market Analyst
  • European markets are called to open higher today, with the FTSE 100, CAC 40 and DAX all set to mark new highs.
  • The US grabbed all the headlines overnight, as Trump supporters and protestors stormed the Capitol building to disrupt the certification of Joe Biden’s election win in November.
  • The UK is expanding its vaccination programme today, while the EU has got a second jab to work with after approving a vaccine developed by US firm Moderna.
  • In commodities, oil prices have surged to their highest level since February after finding support from OPEC+ and the latest US inventory data.

FTSE 100 to build on fresh highs achieved yesterday

The FTSE 100 is set to open 0.9% higher this morning at 6908.5 - marking its highest opening price since March - after ending yesterday at 6847.1.

European markets: New highs for CAC 40 and DAX

France’s CAC 40 is called to open 0.7% higher at 5665.3 from 5628.0 at the last close, while Germany’s DAX is set to open 0.6% higher at 13969.0 from 13887.3. The French index is expected to open at its highest level since February, while the DAX is called to open at a new all-time high.

Start trading the opportunities with indices today.

Trump supporters storm US Capitol during Biden certification

Hundreds of supporters of president Donald Trump stormed the US Capitol building last night as politicians were certifying Joe Biden’s election win last November. They broke through security barricades and into the building, resulting in one person being shot and three others dying of medical emergencies. The US Capital Historical Society said it was the most damaging attack on the heart of US democracy since the British burnt it in 1814.

The certification process in the House of Representatives had to be suspended for hours but is now continuing. Politicians are expected to work through the night until Biden’s win is confirmed despite some of Trump’s allies objecting (unsuccessfully) to results in certain seats like Arizona and Pennsylvania.

Politicians from both sides condemned the violence and reports suggest that there are talks about invoking the 25th amendment, which would allow a majority of the cabinet to declare Trump unable to perform his duties and remove him from office despite the fact he is due to leave on January 20, when Biden’s inauguration will be held.

The stunning events took place just hours after the Democrats won control of the Senate after winning both seats from the Republicans in the Georgia runoff races. Democrats Raphael Warnock and Jon Ossoff beat incumbent Republican senators Kelly Loeffler and David Perdue. It means the Senate is now a 50:50 split between both parties, with incoming vice-president Kamala Harris to have the deciding vote to effectively swing control to the Democrats. It means the Democrats will control the presidency, House of Representatives and the Senate for the first time since 2009.

US markets largely shrugged off the political turmoil of the day, with the Dow Jones closing at a new record high as investors looked beyond the disruption to the likelihood that the Democrats will be able to push through more stimulus and its other policies through the political system.

UK begins rollout of AstraZeneca-Oxford university vaccine

The UK has started delivering the AstraZeneca-Oxford university vaccine to doctor’s surgeries to ramp-up its efforts to vaccinate the most vulnerable people over the coming weeks. Health Secretary Matt Hancock said 1.3 million people had been vaccinated so far, mostly with the Pfizer-BioNTech jab that was the first to be approved. The UK is ambitiously aiming to have all 13 million people that fall into the most vulnerable categories vaccinated by ‘mid-February’.

That is when the UK government is due to review the latest lockdown that was introduced this week, although prime minister Boris Johnson has said legislation will allow measures to run until the end of March if necessary.

The vaccination programme will have to give around 2 million jabs each week to deliver its goal and this vaccine is expected to be quicker and easier to distribute compared to the Pfizer-BioNTech one, which needs to be kept at ultra-low temperatures and is harder to transport.

EU approves Moderna vaccine

The European Medicines Agency (EMA) and European Commission have given the green light to Moderna’s coronavirus vaccine as the bloc looks to ramp-up its vaccination programme following a slow start. It is the second jab to be approved in the EU and provides a further 160 million doses to the bloc, which is tasked with immunising its 450 million-strong population as quickly as possible.

Forex: Narrow movements

GBP/USD traded 0.1% lower at 1.35937 from 1.36077 at the end of Wednesday’s trading session.

EUR/USD was broadly flat at 1.23217 from 1.23266 at the close on Wednesday, when it hit its highest level since April.

Meanwhile, EUR/GBP traded a smidgen higher at 0.90647 from 0.90585.

City Index analyst Tony Sycamore has a look at USD/JPY as investors look beyond the protests and focus on the Democrats winning control of the Senate.

Meanwhile, Joe Perry has a look at what the results of the Senate runoff races means for the dollar and CNH.

Start trading the opportunities in the forex market today.

Commodities: Oil prices surge to new highs

Oil prices have continued to rally and are currently trading at their highest level since February. Brent traded at $54.82 in early trade, up 1.2% from $54.17 at the close on Wednesday, while WTI followed higher to $51.12 from $50.57.

The first OPEC+ meeting of the year has supported prices this week, as Saudi Arabia agreed to voluntarily cut its own output by 1 million barrels per day in February and March in order to support its own economy and the wider oil market, while most other major producers will hold output steady at existing levels. Russia and Kazakhstan, which both pushed for the group to raise output, will be permitted to raise their output by 75,000 barrels per day in February and again in March.

OPEC+ were forced to cut output by record amounts last year as demand plummeted as a result of the pandemic but had planned on raising production by 2 million barrels a day in 2021 – but the group has been hesitant to do so in the current climate.

Prices were also finding support from the recent weakness in the dollar, which tends to push up the price of dollar-denominated commodities. Data from the Energy Information Administration (EIA) also buoyed prices after revealing crude oil inventories fell by 8 million barrels in the week to January 1, much steeper than the 2.1 million decline that was expected.

Start trading the volatility in oil markets today.

Gold traded 0.4% higher this morning at $1926 from $1918 at the close on Wednesday.

Start trading the opportunities in the gold and silver market today.

Market-moving events in the economic calendar

The economic calendar is busy today, with the eurozone economic bulletin kicking things off at 0900 GMT. That will be followed by the bloc’s consumer price index, business climate and retail sales at 1000 GMT.

Attention this afternoon turns to the US, with continuing and initial jobless claims as well as trade balance figures due at 1330 GMT. US ISM services PMI, employment index and prices paid is due at 1500 GMT. Canada’s Ivey PMI is also at 1500 GMT.

Look at all the scheduled events for today using our economic calendar, and stay up to date with the latest news and analysis here.

Related tags: Indices Forex Commodities

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