- U.S. and European stocks rose on Tuesday after further development on stimulus measures and a Brexit trade deal.
- Investors are seeking a deal between Democrats and Republicans that could give markets a much-needed boost to end the turbulence of the year.
- Most Britons will be subject to tough new rules on Wednesday after a new COVID-19 strain has been linked to an acceleration of new cases in London.
- The UK and the EU have relaunched negotiations to reach a trade deal with just two weeks before the end of the Brexit transition period.
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U.S. and European stocks rose on Tuesday, driven by investor optimism over stimulus from a bipartisan group of lawmakers and growing chances of a Brexit trade deal.
Futures related to the Dow Jones, S&P 500 and Nasdaq rose 0.5%, suggesting that the major indices will open later when regular trading begins later.
U.S. lawmakers on Monday unveiled two separate stimulus packages to Congress, worth $ 908 billion in economic relief. Both houses of Congress have until midnight Friday to pass another funding deal to keep government open.
Stock markets were further bolstered by the first doses of the Pfizer-BioNTech vaccine given to patients across the United States after FDA approval for emergency use last Friday. The UK already started vaccination last week with the same vaccine. An FDA advisory committee will review competitor Moderna’s vaccine later this week.
Positive news on both the stimulus and the vaccine front has helped offset concerns over tougher COVID-19 restrictions during the holidays, including in the UK, the Netherlands and Germany.
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Effective COVID-19 vaccines are expected to be widely available to the general population in the second quarter of next year, supporting a return to more normal levels of economic and social activity, said Mark Haefele, chief investment officer at UBS Global Wealth Management.
“So even with the 14% rally in global stocks since the start of November, we believe there is still some upside, and that the rotation of trade over the past month on the laggards of the pandemic the market has more leeway, ”he said.
Much of Britain will be subject to stricter rules on movement on Wednesday after a new strain of COVID-19 has been linked to a faster spread of cases. Nearly 20,250 cases and 232 deaths were recorded in the UK on Monday, according to government data. The UK has one of the worst death rates in the world, with almost 65,000 deaths to date.
The UK and the EU have restarted talks to secure a trade deal as time runs out before the Brexit transition period ends in two weeks.
It ultimately remains to be seen whether the two sides are able to come to an agreement, Rabobank analysts said. “Our basic scenario of a ‘skinny deal’ still stands, but, oh my God, only January 1, 2021 really seems to mark the last page of this book,” they said.
London’s FTSE 100 rose 0.1%, the Euro Stoxx 50 index of major Eurozone stocks rose 0.5%, and the Frankfurt DAX rose 0.6%.
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In the United States, Federal Reserve officials are meeting on Tuesday and Wednesday and may offer new insights on the outlook for monetary policy. There are unlikely to be any big surprises, but the central bank will likely stress the importance of new tax measures to mitigate the threat of a double-dip recession, according to Milan Cutkovic, market analyst at Axi.
The International Energy Agency on Tuesday cut its forecast for global oil demand in 2021 to 5.7 million barrels per day next year. That’s 170,000 barrels per day less than forecast last month. Oil prices were little changed after the announcement, with Brent futures up 0.2% to $ 50.41 and West Texas Intermediate up 0.3% to 47.13 $.
In Asia, China’s Shanghai Composite fell 0.06%, Japan’s Nikkei fell 0.2% and Hong Kong’s Hang Seng fell 0.6%.
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