On December 18, global equity benchmarks plunged while oil prices rallied to near 9-month highs as investors and markets weighed hopes for a US COVID-19 relief package. That scenario plays out even as the US government announced that it would add dozens of Chinese firms to a trade blacklist.
Up until Friday, the Democratic-controlled US. House of Representatives continued with negotiations with the Republican-led Senate working on a $900 billion piece of legislation to support the economy in a pandemic that has killed almost 309,000 Americans.
The European head of currency strategy at TD Securities, Ned Rumpeltin, said:
“Markets in the US (are) going to be focused on the ongoing negotiations to see if we can get things over the line.”
Asian share markets dropped earlier in the day after reports emerged that the United States was getting ready to add many more Chinese firms to a trade blacklist later in the day. Even China’s top chipmaker, SMIC, was added to the blacklist. MSCI’s gauge of stocks across the world lost 0.30% after widespread drops in Europe and Asia.
Turning attention to Wall Street, the S&P 500 lost 13.07 points, or 0.35%, to reach 3,709.41, the Dow Jones Industrial Average fell 124.32 points, or 0.41%, to reach 30,179.05, while the Nasdaq Composite dropped 9.11 points, or 0.07%, to reach 12,755.64.
On December 17, US benchmarks hit record highs and flirted with new highs a day later before retreating. Tesla Inc, the electric carmaker gained almost 6% and recorded massive trading volume. This firm is set to become the most valuable company ever added to the S&P 500.
The currency markets were also active. The British pound dropped from its 2.5-year high that it hit on Thursday with barely days remaining before the UK leaves the European Union single market on December 31. Cable was trading at $1.3493, down 0.66% on the day.
Europe told Britain that there were just hours left for the two sides to strike a deal. That warning undermined British domestically focused mid-caps as the prospect of trade tariffs in the New Year loomed. The chief market analyst at CMC Markets, Michael Hewson, stated:
“The EU-UK talks could well go right up to the wire as neither side wants to be seen to be giving in too easily. It’s all about the optics for both sides, so it could take a little bit longer than most people are comfortable with.”
The dollar index gained 0.183%, with the Euro losing 0.17% to trade at $1.2245. Benchmark 10-year notes last fell 5/32 in their price to yield around 0.9446%, from 0.93% late on Thursday.
Markets were encouraged that the US stood ready to ship around 5.9 million doses of a new COVID vaccine developed by Moderna. Hopes for more distribution of the vaccines helped push the oil prices near nine-month highs. US crude recently gained 1.51% to $49.09 per barrel while Brent was trading at $52.28, up 1.51% on the day.