European Market Open: Stimulus, Brexit clarity to drive higher start

European markets are expected to follow US and Asian indices higher today as the new US stimulus bill and Brexit deal provides some long-awaited clarity to markets.

New Highs 4

  • European markets are called to open markedly higher this morning, after US and Asian markets climbed to new record highs.
  • The signing of a new US stimulus bill and the last-minute Brexit deal are providing clarity to markets and putting some major uncertainty in the rear-view mirror.
  • In forex, the dollar has softened against the euro and the pound.

FTSE 100 to open higher

The FTSE 100 is set to open 0.5% higher at 6577.5 from its last closing price of 6547.3. UK markets closed early on December 24, when the Brexit deal was unveiled, and remained closed on Monday. That means today is the first opportunity for the FTSE 100 to respond to the breakthrough.

European indices: DAX to set to open at record high

France’s CAC 40 is set to open 0.6% higher at 5616.1 from 5583.0.

Germany’s DAX is set to open up 0.7% at 13882.0 – a new record opening price – after ending Monday’s session at 13788.5.

Start trading the opportunities with indices today.

US markets hit record highs

US markets closed at new record highs on Monday, driven by US president Donald Trump’s late approval of a new $2.3 trillion stimulus bill to help the world’s largest economy bounce back from the coronavirus pandemic.

The S&P closed up 1% higher to end Monday at 3738.1, while the DJIA closed 0.7% higher at 30416.0. Asian indices were also supported by the news overnight, with the Nikkei 225 also climbing to its highest level in 30 years.

There is still some wrangling over the stimulus bill. Trump has argued he wanted personal cheques for Americans to be raised from $600 to $2,000. The Democrat-controlled House of Representatives has tried to capitalise by pushing through a vote to raise the amount on Monday, but it is unclear whether it will pass the Republican-controlled Senate.

Prepare for ‘bumpy moments’ ahead of Brexit

Markets have reacted positively to the last-minute trade deal announced by the UK and the EU on December 24, but there will still be ‘bumpy moment’s for UK businesses, according to government minister Michael Gove.

Although the deal has aimed to minimise disruption for both sides, there will be ‘practical and procedural changes’ to deal with when the transition period ends on December 31. With just days to go, businesses have been left with little time to understand what the deal means for them and to adapt. There could be dramatic changes for some industries such as financial services, which is largely excluded from the agreement.

EU ambassadors have provisionally approved the Brexit deal and the bloc will formally ratify it next month, while UK politicians are to vote on the deal this Wednesday.

The UK is also expected to sign a continuity trade deal with Turkey this week to maintain trade as it is now, while the EU is reported to be on the verge of finalising an investment pact with China that has been in the pipeline since 2014.

Admiral Group to distribute cash after asset sale

Admiral Group said it has agreed to sell a portfolio of comparison websites to ZPG Comparison Services Holdings UK for a total of £508 million. The sale includes the likes of and Admiral said it expects to ‘return a majority of the net proceeds to shareholders’. The deal is expected to close in the first half of 2021.

AstraZeneca secures Lynparza approval in Japan

AstraZeneca announced its Lynparza drug has been approved in Japan to treat advanced ovarian, prostate and pancreatic cancers.

William Hill eyes takeover completion early next year

William Hill said its takeover by US casino giant Caesars Entertainment should be completed early next year. The company said it expects to secure the required clearances to complete the deal ‘early in the second quarter of 2021, but possibly as early as March 2021’. William Hill shareholders approved the takeover back in November.

Forex: Dollar softens

GBP/USD traded at 1.34743 this morning, up 0.2% compared to 1.34536 at the close yesterday.

EUR/USD was also up 0.2% at 1.22405 from 1.22159.

Meanwhile, EUR/GBP traded broadly flat at 0.90872 after ending Monday at 0.90795.

Start trading the opportunities in the forex market today.

Commodities: Oil edges higher

Brent traded at $51.14 a barrel this morning, up 0.4% from $50.94 at the end of play on Monday, while WTI followed higher to $47.90 from $47.71.

Start trading the volatility in oil markets today.

Gold traded at $1877 this morning, up 0.2% from $1873.

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

Market-moving events in the economic calendar

The economic calendar is light for the rest of the year. Today, the headline event is the release of S&P/Case Shiller home price indices, a barometer for the US housing market, at 1400 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.

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