US Market Open Indices head lower as US stimulus looks unlikely

• US indices are called to open significantly lower today as time for US politicians to agree on new fiscal stimulus runs out.
• In terms of US stocks, Disney announces it is aiming to treble the number of streaming subscribers by 2024, while Mastercard faces an $18.5 billion lawsuit in the UK.
• European indices have lost over 1% today as the FTSE 100, DAX and CAC all prepare for last-ditch Brexit talks to continue this weekend, with both sides warning a no-deal Brexit is becoming increasingly likely.
• Brent has softened and dipped back below $50 per barrel after breaching the threshold for the first time since March yesterday.

US indices to open lower

US indices are set to open much lower today after both briefly touched new all-time highs during Wednesday’s session, on fears that a fiscal stimulus will not be agreed in time.

The S&P 500 is called to open down 0.7% at 3639.4 from 3666.6 at yesterday’s close.

The Dow Jones is set to open 0.7% lower at 29799.0 from 30011.5.

Find out more about trading indices here.

US Senate expected to vote on short-term spending measures

Time is running out for the US Senate to approve new stimulus to keep the government and economy ticking-over once existing measures end. The existing budget for the government and federal institutions is due to run out by December 18 and nothing has been approved to replace it.

The House of Representatives approved a makeshift measure yesterday to extend existing funding levels for the government for an additional week. The Senate is due to vote on it today and, if signed off by President Donald Trump, then it will stop funds running out next week and provide more time for the longer-term budget to be considered by both sides.

A COVID-19 relief package is expected to be added to any spending measures that are approved to help the economy bounce back – but differences remain between Republicans and Democrats over certain matters, such as how much should be provided in unemployment benefits.

Speaker of the House Nancy Pelosi, a lead Democrat, warned negotiations on a COVID-19 relief package could run right up to the last minute on December 26, when existing emergency measures introduced earlier this year expire.

Pfizer-BioNTech vaccine edges closer toward US approval

A panel of biologists and vaccine experts has recommended that the US Food & Drug Administration approves the vaccine developed by Pfizer and BioNTech. When the panel was asked whether the current scientific evidence shows the benefits of the vaccine outweigh the risks, 17 members of the panel voted yes, four voted no, and one member abstained.

The recommendation is the last major hurdle to be cleared, paving the way for the FDA to approve the vaccine for emergency use in the US within days. The regulator is expected to move quickly considering the UK, Canada and other countries have already approved the vaccine and that US daily coronavirus cases remain close to peak levels.

It has been a bad day for other potential vaccines after GSK and Sanofi said their candidate will have to undergo further testing after failing to deliver the desired results, while one being developed in Australia was abandoned altogether after producing false positives for HIV.

Disney targets up to 350 million streaming subscribers by 2024

Disney has announced its new streaming service Disney+ has attracted over 137 million paid subscribers. It is still someway behind market leader Netflix, which has amassed 195 million subscribers over the last 15 years, but it has smashed expectations since being launched just over a year ago. Disney also unveiled a slew of titles built around core brands like Star Wars and Marvel to bolster content, promising over 100 new titles every year. Disney is aiming to have 300 million to 350 million global subscribers by 2024.

Mastercard faces $18.5 billion lawsuit in UK

The UK Supreme Court has said an $18.5 billion class action lawsuit can be filed against payments giant Mastercard over allegations it overcharged British customers over a 15-year period. Mastercard’s appeal was dismissed and the case could set a precedent for claims to be made against other major payments firms.

European indices plunge on Brexit uncertainty

European indices were down heavily at midday as markets prepare for the likelihood of a no-deal Brexit ahead of Sunday, when both sides plan to make a firm decision as to whether talks can continue.

France’s CAC 40 was down 1.1% at midday at 5481.0 after ending yesterday’s session at 5542.3.

Germany’s DAX was down 1.9% at 13039.0 from 13286.7.

Meanwhile, over the Channel, the FTSE 100 was down 1% at 6528.0, having ended at 6597.2 yesterday – which was its highest closing price since early March. Forex.com analyst Fiona Cincotta considers whether the index can maintain its bullish trend as the Sunday Brexit deadline looms closer.

Find out more about trading indices here.

EU chief says no-deal Brexit more likely than a deal

European Commission president Ursala von der Leyen addressed EU leaders on Friday, telling them the probability of a no-deal Brexit is higher than a deal being struck. That follows on from prime minister Boris Johnson’s warning that no-deal was a ‘strong possibility’.

Negotiators have been given until Sunday to deliver material progress, but it seems highly unlikely that both sides can agree on the three major sticking points – fisheries, governance and the level playing field – considering they have struggled to find any common ground on the issues over the last four-and-a-half years. Nobody is expecting a deal to be miraculously unveiled before Sunday, but both sides want to understand if a deal is still possible.

Bank of England says banks still well-positioned during pandemic

The Bank of England said major UK banks have the capacity to continue lending as the economy recovers from the pandemic. The central bank’s third financial stability report of the year showed UK banks have built up large enough buffers to absorb any economic shocks the pandemic has left to offer, while most risks to the financial sector from a no-deal Brexit have been mitigated. Still, governor Andrew Bailey warned there ‘is a limit to what we can do’ when it comes to the threat of disruption from a no-deal.

The report comes on the same day that regulators gave the green light to UK banks to resume dividend payments after being told to suspend payouts earlier this year to preserve cash during the pandemic.

Forex: USD in spotlight

Forex.com analyst Christopher Chevalier writes about how the increased likelihood of a no-deal Brexit could impact GBP/USD.

The most drastic movements in the currency markets in early afternoon trade, according to data from Reuters, are as follows:

Find out more about trading forex here.

Commodities: Oil prices dip back below $50 threshold

Oil prices are in focus after Brent pushed past the $50 mark for the first time since early March yesterday, but fell back below the key threshold during trade on Friday.

Brent traded at $49.84 at midday, losing ground from $50.38 at the close of trade yesterday, while WTI traded at $46.56 from $47.03.  

The rollout of vaccines is underpinning hopes that demand will pick up going forward as economies recover. But fears over demand remain as cases continue to surge in some countries like the US, which has posted data this week showing an unexpected surge in oil inventories to imply lacklustre demand.

Find out more about trading the volatility in oil here.

Gold trades at $1831.3 compared to $1836.7 at the close of trade on Thursday as it continues to lose ground after hitting a two-week high on Monday.

Find out more about trading gold here.

Market-moving events in the economic calendar

The economic calendar is light for the rest of the day, with attention on the US producer price index at 1330 GMT and the Michigan consumer sentiment index at 1500GMT.

Look at all the scheduled events for today using our economic calendar, and stay up to date with the latest news and analysis here.