After a record-breaking session on Wall Street, Asian equities were mostly higher on Tuesday, with Chinese stocks bucking the trend. European markets opened on an upbeat footing, cheering U.S. President Donald Trump's signing of the pandemic and spending bill and the Brexit trade deal.
Averting a federal government shutdown that would have started today, the US President signed a $900-billion coronavirus economic aid package and a $1.4-trillion package to fund government agencies. Furthermore, the U.S. House of Representatives backed Trump's proposal and voted for increasing the stimulus checks to $2,000 from $600. Also on the positive side, global investors expect a massive roll-out of coronavirus vaccinations in many countries to help the world return to normalcy in the coming months.
Against this backdrop, the FTSE 100 in London rallies 2.22% to 6,646, Italy’s FTSE MIB gains 0.14 percent to 22,319, France’s CAC 40 is up by 0.51% to 5,617, while the German DAX 30 rises by 0.67% to 13,882. US stock index futures keep rising, signaling another record-breaking day on Tuesday.
In currencies, the safe-haven dollar is on the defensive versus its major counterparts as upbeat global developments fueled appetite for high-yielding assets. EURUSD tried to challenge the 1.2260 area earlier in the day and has retreated marginally since then. The euro retains a strong bullish tone despite the pair refrains from climbing to fresh long-term highs registered around 1.2270 earlier this month. In the short-term, the common currency will likely stay on the offensive, but short-term profit-taking could take place as well.
Meanwhile, oil prices are marginally higher, having settled above the $51 handle on Tuesday. Brent crude regained the upside bias amid a global risk-on rally ahead of the New Year’s holiday. However, in the absence of industry drivers, the futures could struggle to climb above the $52 figure and refresh March highs in the near term. Furthermore, a bearish correction could take place if Brent fails to make a decisive break above $51.60 any time soon. Later today, the API report could affect near-term dynamics in the oil market.
Nathan Lambert, Head of Global FX Analytical Department