European Market Open: Lower start on coronavirus fears
January 11, 2021 7:16 AM
European markets are called to open lower today on fears that tighter rules may be needed to control the coronavirus whilst vaccines are rolled out.
- European markets are called to open lower today, as rising coronavirus cases in several countries prompts fears that tighter lockdown rules may be needed.
- In the US, Democrats are continuing to call for president Trump to be removed from office with just nine days left in the White House.
- In commodities, the rally in oil prices last week looks set to partially reverse today as a surge in coronavirus cases hampers the outlook for the recovery in fuel demand.
FTSE 100 to open sharply lower
The FTSE 100 is set to open 0.8% lower at 6849.0 today after ending last week at 6903.2. The index ended last week at its highest level since February.
European markets to fall from recent highs
France’s CAC 40 is called to open 0.8% lower at 5681.6 from 5725.3 at the end of last week. The CAC ended last week at its highest level since February.
Germany’s DAX is set to open at 13955.0 today, down 1.1% from its last closing price of 14108.0, having hit an all-time record high last Friday.
UK opens new vaccination centres in fight against COVID-19
Seven large vaccination centres will be opened today, as the UK looks to accelerate its vaccination programme. Epsom racecourse, London’s Nightingale field hospital and a football stadium in Bristol are among the new sites to open today, while more doctor’s surgeries, hospitals and pharmacies will rollout vaccinations too.
On Sunday, health secretary Matt Hancock said around 200,000 people were being vaccinated daily. The government has said it needs to be vaccinating 2 million people a week for it to achieve its goal of immunising all vulnerable people by mid-February. Hancock also said the UK was aiming to have ‘every adult’ offered a vaccine by the Autumn.
UK considering tighter lockdown restrictions
The acceleration of the vaccination programme comes as the number of coronavirus deaths in the country exceeded 80,000, and as ministers met over the weekend to discuss whether tighter restrictions are needed and how best to enforce them.
The Telegraph reports this morning that ministers are considering banning people from exercising together if they are not in a support bubble, introducing formal rules on wearing face masks, and being stricter with businesses – particularly supermarkets - about how they operate safely.
UK chancellor fears higher interest rates as government debt soars
The chancellor Rishi Sunak expressed concern over the weekend that higher interest rates would significantly ramp-up the cost of servicing government debt that continues to grow during the pandemic. Interest rates currently sit at a record low of 0.1% and that has aided the government’s ability to inject £280 billion into the economy over the past year but Sunak warned he had to get the country’s finances back under control at some point.
Speaking to CityAM, Sunak argued against the idea of capitalising on low interest rates and said the government needed some ‘humility’ when it came to the country’s financial future.
‘Over time I think it’s important public finances are sustainable and lots of people have slightly different versions of what sustainable looks like, but I think they agree it should be sustainable over time and that’s something I have to have regard to as the person responsible for the nation’s finances,’ he said.
Democrats step-up efforts to remove president Trump
The Democrats in the US House of Representatives are continuing to apply pressure on Republicans to take action to remove president Donald Trump. Although Trump only has days left in office before Joe Biden takes office on January 20, Democrats are pushing ahead with plans to remove Trump’s powers in the meantime.
The Democrats are today expected to pass a resolution that would call on vice-president Mike Pence to invoke the 25th amendment that would declare Trump as incapable of discharging his duties. The Democrats have warned they would look to impeach Trump for a second time if Pence doesn’t engage.
Speaker of the House and lead Democrat Nancy Pelosi warned the party ‘will act with urgency’ because the president ‘represents an imminent threat’ to the US constitution and democracy.
The calls for Trump to be removed are in reaction to his role in scenes of rioters storming the US Capitol building last week. Most Republicans, including Pence, are reluctant to oust him with such little time left in office, and it is not clear how quickly Democrats would be able to progress impeachment proceedings. Still, the number of Republicans urging Trump to resign is growing.
Forex: Dollar strengthens
GBP/USD traded at 1.35090 in early trade, down 0.4% from 1.35692 at the end of play on Friday.
EUR/USD was trading at 1.21845 this morning, down 0.3% from 1.22182 at the end of last week.
Meanwhile, EUR/GBP traded 0.2% higher at 0.90197 after closing at 0.90060 last week.
Commodities: Oil price rally begins to reverse
Following the rally last week driven by output cuts by Saudi Arabia, oil prices were trading lower on Monday morning as the market took tighter coronavirus restrictions into account.
Brent traded at $55.14 in early trade after ending last week at $56.26, while WTI had fallen to $51.74 from $52.78. Still, prices have managed to retain most of the gains they booked last week.
A number of countries tightened rules over the weekend. France introduced a tougher curfew in Marseille after discovering the new variant originally found in the UK, Greece extended restrictions and, most notably, China placed 11 million people in the city of Shijiazhuang under a strict lockdown over the weekend following an outbreak. China – the second largest fuel market in the world – reported its biggest daily increase in cases for five months.
Gold traded at $1846.3 this morning, broadly flat after ending last week at $1847.4.
Market-moving events in the economic calendar
The economic calendar is light today, with the focus on the Bank of England this afternoon. The BoE’s Silvana Tenreyro is due to make a speech at 1400 GMT, followed by the governor Andrew Bailey at 1500 GMT.
Elsewhere, the Bank of Canada will release the business outlook survey at 1430 GMT, while Japan’s current account numbers round of the day at 2350 GMT.
Forex.com analyst Joe Perry has a look at the Week Ahead, and asks if large investors are looking past the fiscal stimulus and coronavirus.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.