- US markets are expected to return to positive territory today as pressure mounts on president Trump in his final days in office.
- European markets were trading lower at midday, as news suggests European countries will have to go through more hardship before they can recover from the pandemic.
- In forex, the pound has gained ground against both the euro and the dollar.
- In commodities, oil has climbed to a new 11-month high as Goldman Sachs says prices could reach $65 per barrel by the middle of the year.
US markets to return to higher ground
US markets are expected to open higher after closing lower yesterday, but they are still below the all-time highs set at the end of last week.
The S&P 500 is called to open 0.2% higher today at 3809.2 after ending lower yesterday at 3800.2.
The Dow Jones is set to also open up 0.2% at 31075.5 from yesterday’s closing price of 31014.5.
Start trading the opportunities with indices today.
Democrats to impeach Trump on Wednesday
Democrats in the US intend to impeach president Donald Trump on Wednesday if he has not stepped down or been removed from office. The party warned it would push ahead with impeachment proceedings if vice-president Mike Pence does not remove the president from power.
The House of Representatives is due today to vote on a resolution calling for Pence to invoke the 25th amendment, which would allow him and the majority of the cabinet to remove Trump due to an inability to discharge his duties.
More Republicans have called for Trump to resign following the turmoil last week when rioters stormed the US Capitol building, but they are reluctant to oust him in his final days in office ahead of Joe Biden being inaugurated on January 20.
As a result, impeachment proceedings are expected to follow on Wednesday if Trump is still in the White House. Lead Democrat Nancy Pelosi said ‘the president’s threat to America is urgent, and so too will be our action’.
The action comes as the FBI warned there could be violence because of ‘armed protests’ planned at 50 state capitols during Biden’s inauguration.
Still, an impeachment would unlikely be wrapped-up before then, with Democrats arguing Trump still needs to be held to account for his role in the ‘incitement of insurrection’. The Democrats also hope an impeachment could prevent Trump from running for president in 2024.
There is no guarantee that an impeachment will be successful. While it is expected to pass the House of Representatives, it will need two-thirds of the Senate to agree for it to be approved, therefore requiring the support from a significant number of Republican senators.
Corporate America makes feelings known to Republicans
The Republican party is also starting to come under pressure from big business that have threatened to cut-off funding and donations to the party in wake of the tumultuous events of last week.
Amazon, General Election, AT&T, Verizon, American Express, Cisco, Mastercard and Comcast are just some of the giants to release statements that revealed they were withholding donations or considering cutting-off funding. The primary problem for most of them is with Republicans that refused to certify Joe Biden’s election win, but last week’s turmoil at the US Capitol building has not helped.
European markets in negative territory
France’s CAC 40 was down 0.1% at 5655.5 from 5663.8 at the close on Monday.
Germany’s DAX was broadly flat at midday at 13934.0 from 13938.2 at the last close.
Meanwhile, over the Channel, the FTSE 100 was down 0.6% at 6752.3 from its last closing price of 6795.1.
In today’s Top UK Stocks to Watch, Games Workshop shares slide despite smashing targets, Kingfisher sees sales growth accelerate, Ferrexpo posts a strong rise in revenue, and Playtech says profit should be higher than expected in 2020.
Bank of England governor says UK in ‘very difficult period’
Bank of England governor Andrew Bailey said the UK economy was in a ‘very difficult period at the moment’ but that he still expects it to recover in the same way as it outlined in November.
The country’s economy, along with many others, is likely to enter another recession early this year as new lockdown rules hits the economy with a gradual recovery starting in either the second quarter or, more likely, the third quarter of this year.
Bailey said the BoE believed economic output in the last three months of 2020 will be flat or slightly lower, but also said unemployment would no longer peak at 7% or 8% as previously expected thanks to the government extending its jobs support schemes. He did, however, estimate unemployment may have risen to around 6.5% from the last reported figure of 4.9%.
The governor also played down the chances of negative interest rates being introduced but said ‘there is nothing to stop’ them being introduced in the future if appropriate.
Germany could remain in lockdown until early April
German newspaper Bild reported that Germany could remain in lockdown until early April. Chancellor Angela Merkel is reported to have told lawmakers that it is necessary to stop the spread of the new variant of the virus found in the UK, which has now spread to several other countries around the world.
‘If we don’t manage to stop this British virus, then we will have 10 times the number of cases by Easter. We need eight to 10 more weeks of tough measures,’ Bild quoted Merkel as saying.
German economy to bounce back in 2021
Germany’s economy is expected to grow by 3.5% this year, staging a partial recovery after falling by around 5% in 2020. The BDI, which represents the interests of industries, warned the economy would not fully recover its pandemic-induced losses until 2022 at the earliest.
Notably, the forecasts are significantly lower than the 4.4% expansion predicted by the government.
Forex: Pound gains against euro and dollar
GBP/USD was trading at 1.35891 at midday, up 0.5% from 1.35150 at the close on Monday.
EUR/USD traded broadly flat at 1.21519 from its last closing price of 1.21511.
Forex.com analyst Fiona Cincotta has a look at EUR/USD as it picks up from session lows and re-takes 1.2150 on cautious market optimism.
Meanwhile, EUR/GBP was trading at 0.89420 at midday, down 0.5% after ending yesterday at 0.89888.
Start trading the opportunities in the forex market today.
Commodities: Fresh highs for oil
Oil prices started to find higher ground once again after its recent rally was disrupted by fears that the global economy would take longer to recover from the pandemic. Brent climbed to its highest level since February after four consecutive days of gains were disrupted on Monday.
Brent traded at $56.43 at midday from $55.60 at the close yesterday, while WTI followed to a fresh high of $52.96 from $52.22.
Notably, Goldman Sachs said it thinks oil prices could reach $65 a barrel by the middle of this year, having previously thought it wouldn’t reach that level until the end of 2021. The bank said this took into account the output cut of 1 million barrels a day announced by Saudi Arabia last week and the Democrat-controlled Congress in the US, which would lead to a ‘tighter’ medium-term outlook. The rollout of vaccines this year should also allow demand to recover.
WTI will be in focus later when the US API weekly crude oil stocks change, providing an insight into US demand, is released at 2130 GMT. Reuters reports that markets are expecting this to show a fall in inventories, which would be supportive to prices.
Start trading the volatility in oil markets today.
Gold was trading at $1860 at midday, 0.9% higher from its last closing price of $1843.
Start trading the opportunities in the gold and silver market today.
Market-moving events in the economic calendar
Central banks dominate an otherwise thin economic calendar today. The US Federal Reserve’s Lael Brainard is to give a speech at 1435 GMT followed by Eric Rosengren at 1900 GMT.
US JOLTS job openings will be published at 1500 GMT, alongside the economic optimism index.
Look at all the scheduled events for today using our economic calendar, and stay up to date with the latest news and analysis here.