Stocks mark time despite US stimulus, Brexit hopes

·4-min read
Will US lawmakers be able to find the path to an agreement on stimulus measures? Confidence they will is helping push stock markets higher

Stock markets marked time Thursday as investors kept one eye on US stimulus progress and the rollout of vaccines and the other on surging infections and new lockdowns.

The pound kept at around 19-month highs against the dollar as the Bank of England held fire over interest rates and stimulus as Britain and the EU continue their 11th-hour talks on their post-Brexit trading arrangement.

The strengthened pound weighed on London's benchmark FTSE 100 stocks index featuring multinationals' earnings in dollars.

Eurozone equity indices climbed modestly after gains across much of Asia, although Germany's DAX eyed a fresh push towards its record close of 13,800 seen in February before it collided with a Covid-induced loss of lustre.

Wall Street was steady as she goes with the Dow adding just 0.4 percent mid-session while the dollar was struggling after a Federal Reserve update.

Bitcoin extended gains to a fresh record above $23,000, hovering around the $23,500 mark at 1700 GMT for a 13 percent rise over 24 hours.

The unit, which was wallowing around $5,000 in March, has soared to fresh heights notably since online payments giant PayPal said it would enable account holders to use cryptocurrency and institutional investors began to climb aboard in numbers.

"Markets overall are still in a positive frame of mind, managing to find the good news in an otherwise dull Fed statement and looking forward to some progress on a US stimulus deal, the major narrative behind this market bounce," said Chris Beauchamp, chief market analyst at IG trading group.

Regarding US stimulus, lawmakers said they were hopeful of passing a much-needed rescue package for the economy as they haggled over details of a bipartisan proposal that appeared to have broken months of deadlock.

With the two most contentious items removed from the plan, which is said to amount to around $900 billion, Republican Senate Majority Leader Mitch McConnell said leaders "made major headway".

"Wall Street is completely focused on stimulus talks and ignored deteriorating US economic data, except for the robust housing market," said Oanda analyst Edward Moya.

"There’s been no firm update on the progress of the $908 billion bipartisan relief bill, and Congress is fast running out of time to get a package over the line. However, much like the pound and Brexit, the Dow expressed optimism that a deal is incoming," said Connor Campbell at Spreadex.com.

New applications for US jobless benefits increased for the second week in a row, according to government data released Thursday, with 885,000 applications submitted last week.

With additional jobless benefits set to run out over the holidays, news of rising unemployment may push lawmakers to reach a deal.

Moya said investors thought stocks were also rising on "hopes that a post-Brexit trade deal will be reached by Sunday".

EU negotiator Michel Barnier on Thursday said talks with Britain on a post-Brexit trade deal were progressing but that there had been no breakthrough.

"Good progress, but last stumbling blocks remain. We will only sign a deal protecting EU interests and principles," Barnier tweeted.

With Covid still casting a shadow over seasonal festivities, some analysts were speculating to what degree the pandemic would ramp down consumerism over Christmas.

"We are all our own baristas now. Greater consumption at home is the structural change that the industry needs to prepare for," quipped Nicholas Fereday, Rabobank senior analyst for consumer foods, after the firm held a virtual food & agribusiness summit looking at the impact of the pandemic on the global supply chain.

- Key figures around 1630 GMT -

London - FTSE 100: DOWN 0.3 percent at 6,551.06 points (close)

Frankfurt - DAX 30: UP 0.8 percent at 13,66725 (close)

Paris - CAC 40: FLAT percent at 5,54946 (close)

EURO STOXX 50: UP 0.6 percent at 3,563.91

New York - Dow: UP 0.4 percent at 30,278.20

Tokyo - Nikkei 225: UP 0.2 percent at 26,806.67 (close)

Hong Kong - Hang Seng: UP 0.8 percent at 26,678.38 (close)

Shanghai - Composite: UP 1.1 percent at 3,404.87 (close)

Pound/dollar: UP at $1.3598 from $1.3503 at 2240 GMT

Euro/pound: DOWN at 90.12 pence from 90.26 pence

Euro/dollar: UP at $1.2254 from $1.2144

Dollar/yen: DOWN at 103.24 yen from 103.43 yen

West Texas Intermediate: UP 0.8 percent at $42316 per barrel

Brent North Sea crude: UP 0.6 percent at $51.41 per barrel

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