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DJIA 31019,50
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DAX 13910,50
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Coronavirus is starting to make an increasing number of adjustments to the chief financial administrations of developed countries. An avalanche of new diseases in the UK and Ireland puts economic growth in doubt for the first half of 2021.
S&P500
Another conflict between Democrats and Republicans is brewing in the US. The FBI has even warned of possible armed protests in connection with Joe Biden’s inauguration as president. In parallel, the US parliament wants to vote to impeach Trump. All this political turmoil is not good for the current market situation. Investors are eagerly awaiting Biden’s speech, which is expected to outline future stimulus measures.
There are rumours that there will be a lot of money coming into the economy, up to USD 3 trillion. Biden will try to make this aid package as universal as possible to meet the expectations of the electorate.
However, already now the S&P500 index is at its all-time highs. Excessive investor optimism could lead to some corrections in the equity markets.
There is also some news from the US Federal Reserve. Officials are beginning to hint that perhaps bond purchases will be reduced by the end of 2021. Of course, the coronavirus could make unpredictable adjustments, but such statements could support the US dollar against the Euro and other major currencies.
The possibility of an additional lockdown is growing in Europe. Angela Merkel is considering extending the quarantine. This means that it is likely that one of Europe’s biggest economies will continue to be bogged down by COVID-19 throughout the first quarter of 2021. Other European Union countries are concerned about a sharp rise in infections with the new type of coronavirus in the UK and Ireland.
Uncertainty in the US markets, together with a strong rise in Europe, signals that a difficult time is beginning for all market participants. Long-term decisions will not be possible and will have to be analysed almost on a daily basis.
In the current situation, the S&P500 index could go into a small correction before Joe Biden’s statement and the release of details of his programme.
What’s in store for us today?
10.00 ECB President Christine Lagarde to give a speech
14.30 US Core CPI for December
16.30 US Crude Oil Stocks
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