Spreadex Market Update

Biden stimulus plans fails to cheer markets in face of covid-19-impacted data



A $1.9 billion stimulus package announcement from Joe Biden – including enhancing payments to Americans by $1,400 – failed to prevent losses at the European open.

It seems the market’s view is that it is all well and good promising such stimulus – now Biden needs to get it through a precariously balanced, and distracted, Senate. If the incoming President can achieve that, then investors might be in the mood to celebrate.

For now, however, they were too busy crunching the latest batch of covid-19-impacted numbers. In the UK that meant news the economy contracted by 2.6% in November – better than the -4.6% expected, but a screeching halt to 6 consecutive months of expansion. Industrial and manufacturing production both underperformed, at -0.1% and 0.7% respectively, but with construction output ahead of estimates at 1.9%.

The FTSE took little joy from the fact the UK economy didn’t suffer quite as bad as forecast – contraction is contraction whatever way you slice it, and this was during the lesser November lockdown. Worried about what the figures will look like for the period covering this 3rd, harsher, set of restrictions, the UK index fell 0.6%, unwinding yesterday’s rebound.

Echoing the mood elsewhere, the Eurozone indices fared no better. A 0.4% drop for the DAX once again put some distance between the German bourse and its 14,000 milestone, while the CAC tumbled 0.7%, slipping back under 5,650.

At the moment the Dow Jones doesn’t seem ready to applaud Biden’s stimulus plans, especially in light of Thursday’s jobless claims reading, which neared 1 million for the first time since the end of August.

Instead the Dow is facing a 100 point decline after the bell rings stateside, a loss that would leave it a fraction above 30,900.

One thing that could change the complexion of this afternoon’s trading is the US retail sales numbers for December. The standard reading is set to rise from -1.1% to 0.0% month-on-month, with the core figure up from -0.9% to -0.1%. Beats for either of those could put a smile on the Dow’s face.

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