- European markets are set to open higher today, ahead of the summit of EU leaders and the European Central Bank meeting.
- In forex, sterling is hitting new levels with EUR/GBP trading at its lowest level since May 2020 while GBP/USD has climbed to its highest level since April 2018.
- In commodities, oil prices have edged higher despite US data showing an unexpected build in inventories.
FTSE 100 to open higher
The FTSE 100 is set to open 0.3% higher this morning at 6764.0 from 6746.0 at the end of play yesterday.
European markets to follow higher
France’s CAC 40 is set to open broadly flat this morning at 5646.0 after closing at 5646.5 yesterday.
Germany’s DAX is set to open 0.1% higher at 13959.0 from 13944.6 at the last close.
Biden gets to straight to work after becoming president
Joe Biden wasted no time getting to work after being sworn-in as the 46th president of the US, signing no less than 17 executive orders on his first day in office to start reversing the Trump administration’s policies.
This includes orders to rejoin the Paris climate accord, halt the withdrawal from the World Trade Organisation, revoking the Keystone XL pipeline permit, unwinding certain travel bans, cutting-off funding for the border wall with Mexico, and making masks mandatory on federal property.
He has also started a process to extend a suspension on evictions until the end of March and asked for student loan repayments to be suspended until the end of September.
Forex.com analyst Joe Perry has a look at the economic, geopolitical and social implications of a Biden presidency and outlines what it could mean for markets.
US stock markets hit record highs on Biden’s inauguration
US and Asian stock markets have hit fresh highs as markets prepare for a wave of fiscal stimulus to get the world’s biggest economy going again after being ravaged by the coronavirus pandemic.
The S&P 500 closed 1.2% higher while the Dow Jones edged 0.8% higher, both having hit new all-time highs during the day. Asian markets followed when they opened, with the likes of the Hang Seng soaring to its highest level since May 2019.
A new $1.9 trillion fiscal stimulus plan outlined by Biden looks likely to pass in the coming weeks considering the Democrats control Congress and some Republicans have signalled they are open to working with the new president.
The package – considerably larger than previous ones – has signalled that the US will do whatever it takes to support the economy during the pandemic and get it back up and running with a better and faster vaccination programme. Janet Yellen, Biden’s pick for Treasury secretary, said earlier this week that politicians needed to ‘act big’ with spending plans and worry about the debt pile later, sending a signal that the US intends to spend its way out of any potential recession.
European Summit to discuss coronavirus pandemic response
European leaders will meet today to discuss how the bloc should tackle the growing challenges of the coronavirus pandemic. The meeting will start at 1700 GMT.
The EU is keen for the bloc to take a coordinated and synchronised approach to the pandemic – whether that be on vaccines or travel restrictions – in the hope that the whole group can recover together. On Tuesday, the European Commission said the EU is aiming to have at least 70% of adults vaccinated by the summer despite a rather slow start across the bloc.
Leaders will undoubtedly discuss news that Pfizer is to delay deliveries of its vaccine developed with BioNTech whilst it scales up manufacturing, threatening to derail vaccination programmes. The pair said they need to cut production in Belgium this month in order to scale-up output in Europe in the coming months.
Ursala von der Leyen, the president of the European Commission, also urged yesterday that countries needed to work together on border closures and other measures after Germany warned it may need to tighten its own border controls.
ECB preview: no surprises expected
The European Central Bank is in focus today. The ECB is expected to make its interest rate decision at 1245 GMT and make a statement at 1330 GMT. No surprises are expected after the central bank increased and extended its Pandemic Emergency Purchase Programme at its last meeting in December.
Forex.com analyst Fiona Cincotta says the central bank is in wait and see mode in her ECB preview.
Forex: New record highs for sterling
EUR/GBP was trading at 0.88493 in early trade today – its lowest level since May – from 0.88657 at the end of play on Wednesday.
GBP/USD traded 0.4% higher at 1.37082 – its highest level since April 2018 - from 1.36553 at the last close.
Forex.com analyst Joe Perry has a technical look at the pound as it tests key levels against several different currencies.
Meanwhile, EUR/USD was up 0.2% at 1.21311 after ending yesterday at 1.21059.
Commodities: Oil prices shrug off rise in US inventories
Brent traded at $55.92 a barrel this morning after closing at $55.69 yesterday, while WTI edged up to $53.15 from $52.95.
Oil prices have found support from incoming Biden administration as expectations grow that the new president will introduce a slew of new fiscal stimulus to get the world’s largest economy going again.
WTI was in focus yesterday when the American Petroleum Institute revealed US crude oil inventories increased by 2.6 million barrels in the week to January 15 – a starkly different result from the 1.2 million barrel decline expected by markets.
Gold traded at $1874 an ounce in early trade, slightly higher than $1872 at the end of play yesterday.
Market-moving events in the economic calendar
The ECB interest rate decision at 1245 GMT is the headline event in the economic calendar today, with the central bank due to make a statement at 1330 GMT. Eurozone consumer confidence figures will come out after at 1500 GMT.
Attention turns to the US this afternoon, with initial and continuing jobless claims due at 1330 GMT, coinciding with housing starts, building permits and the Philadelphia Fed manufacturing survey.