European Market Open: Trump is impeached
Joshua Warner January 14, 2021 7:14 AM
European markets are called to open higher this morning after Donald Trump became the first US president to be impeached twice.
- European markets are called to open higher today after coming under pressure earlier in the week.
- The UK is aiming to run a 24/7 vaccination programme as medical professionals warn the latest wave of the virus has been more deadly than the first.
- The US remains centre stage today after president Trump was impeached for a second-time yesterday and ahead of president-elect Biden’s speech later today.
- In forex, the dollar is in focus ahead of Biden’s speech and an update from US Federal Reserve chair Jerome Powell, while EUR/GBP has sunk to its lowest level since November.
- In commodities, oil prices continue to take a breather from the recent rally.
FTSE 100 to open 0.3% higher
The FTSE 100 is set to open 0.3% higher today at 6770.5 after ending yesterday at 6749.3.
European markets eye higher ground
France’s CAC 40 is called to open 0.4% higher at 5686.0 after ending yesterday at 5666.0.
Germany’s DAX is set to open 0.3% higher at 13997.5 from 13957.5 at the last close.
Analyst Fiona Cincotta here looks at the price action of the Dax
UK targets 24/7 vaccinations as latest wave proves more deadly
The UK is hoping to vaccinate people 24 hours a day, 7 days a week as deaths reached a new daily high on Wednesday.
A total of 1564 people died within 28 days of a positive coronavirus test yesterday. Yvonne Doyle, the medical director for Public Health England, said ‘today we have reported the highest number of deaths on a single day since the pandemic began’.
‘There have now been more deaths in the second wave than the first,’ she added.
As the new variant continues to cause chaos, prime minister Boris Johnson said he wants 24/7 vaccinations taking place as quickly as possible. Right now, it is not possible because there are constraints on supply, but the arrival of 2 million AstraZeneca doses a week from around mid-February is expected to bolster supplies.
The country is hoping to vaccinate 2 million people per week to allow all vulnerable people to be protected by mid-February and so ‘all adults’ can be offered a jab by the Autumn. Pharmacies are expected to start administering vaccines from today, including major high street brands like Superdrug and Boots.
‘Mechanical, obvious, inevitable consequences’ for UK post-Brexit
Michel Barnier, who led the EU’s negotiating team during Brexit talks, has warned that there will be friction at the UK-EU border as a result of a Brexit.
Barnier said ‘there are mechanical, obvious, inevitable, consequences when you leave the single market and that’s what the British wished to do’. He said that while many businesses will eventually overcome the changes that came into force at the start of the year, there will be structural changes that both sides will have to adapt to. He warned the agreement ‘will not be renegotiated’ and said it ‘now needs to be implemented’.
Trump becomes first president to be impeached twice
Donald Trump has become the first US president to be impeached twice after 10 Republicans partnered with the Democrats to decide he had incited violence ahead of the violent scenes at the US Capitol building last week.
The House of Representatives voted 232-197 in favour of the article of impeachment that represents a formal charge against the president for ‘incitement of insurrection’.
The impeachment is unlikely to remove Trump from office before January 20, when Joe Biden is inaugurated, but Democrats are hoping the impeachment will hold him to account and possibly prevent him from running for president again in 2024.
This will trigger a trial in the Senate and a two-thirds majority would have to vote against Trump in order to remove him and convict him of the charge. That means around 17 Republican Senators would need to turn on Trump for it to be successful.
President-elect Biden to outline fiscal stimulus plans
President-elect Joe Biden will make a speech later today to outline plans for a huge fiscal stimulus bill to help the US economy recover from the pandemic.
Reports suggest the new fiscal stimulus could be worth anywhere between $1.3 trillion to $2 trillion and include direct payments of up to $2000 to hard-hit citizens. Having now won control of Congress following the Georgia run-off races, Biden is expected to push ahead with a sweep of Democrat policies.
A $900 billion package was recently agreed by Democrats and Republicans, but Biden has described this as a down payment ahead of his inauguration. That included direct payments of $600 to citizens after Democrats were unsuccessful in their attempts to raise the figure.
Forex: Dollar in focus ahead of Biden and Powell
The dollar is in focus today ahead of Biden’s speech and the update from the Fed chair Jerome Powell.
GBP/USD traded at 1.36354 in early trade, flat from 1.36376 at the close of trade yesterday.
EUR/USD was also broadly flat this morning at 1.21510 from 1.21578.
Forex.com analyst Joe Perry has a look at US dollar pairs and how they could react ahead of today’s speeches from Biden and Powell.
Meanwhile, EUR/GBP traded at 0.89113 this morning – its lowest level since November 26 - from 0.89149 at the end of play on Wednesday.
Commodities: Oil takes a breather from recent rally
Oil prices continue to take a breather following the recent rally. Production cuts by Saudi Arabia, bigger drawdowns in inventories in the likes of the US and China, and buoyant price forecasts from major US banks have all been providing support to prices over the last week or so. That pushed prices to an 11-month high, but prices fell yesterday and look set to fall further today as coronavirus fears come back into play.
Brent traded at $55.95 this morning from $56.00 a barrel at yesterday’s close, while WTI had edged a smidgen higher to $52.93 from $52.90.
The EIA natural gas storage change for the week to January 8 will be published at 1700 GMT.
Gold traded at $1841 this morning after losing ground after closing at $1845 yesterday.
Analyst Fiona Cincotta here looks at the price action of gold ahead of Biden's announcement and Fed Powell's speech.
Market-moving events in the economic calendar
The economic calendar is quiet this morning before activity picks up this afternoon. There is Germany’s real GDP growth due at 0900 GMT and Ireland CPI numbers at 1100 GMT. The European Central Bank’s monetary policy meeting accounts will be released at 1230 GMT.
Attention then turns to the US, with continuing and initial jobless claims due at 1330 GMT. Jerome Powell, the chair of the Federal Reserve, will make a speech at 1730 GMT.
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.