European stock markets opened nearly unchanged with a bearish bias but managed to turn positive afterwards as investors cheered the reports that Britain approved a COVID-19 vaccine developed by AstraZeneca and Oxford University. AstraZeneca said the vaccine had been approved for use for emergency supply to battle a new variant of the virus. The pan-European STOXX 600, which rose to a 10-month high on Tuesday, rose 0.13% during the first hour of the session.
In general, most regional markets were subdued due to thin volumes in a holiday-shortened week. Meanwhile, Senate Majority Leader Mitch McConnell initially blocked Senate Minority Leader Chuck Schumer’s effort to fast-track the bill, passed by the House earlier this week, that would increase checks to $2,000 from $600. However, today, he put forward the bill for $2,000 paycheck despite obstructing it earlier.
Against this backdrop, the FTSE 100 in London gains 0.29% to 6,621, Italy’s FTSE MIB gains 0.37 percent to 22,341, France’s CAC 40 is up by just 0.06% to 5,615, while the German DAX 30 rises by 0.16% to 13,783. US stock index futures were slightly higher in early morning trading on Wednesday after the losses suffered overnight.
In currencies, the dollar keeps losing ground on Wednesday, with EURUSD climbing to fresh April 2018 highs just below the 1.2300 handle earlier in the day. The pair has retreated since then but stayed positive on the intraday charts amid the news that US Senate Leader Mitch McConnell has finally put forward the bill for $2,000 paycheck. Later in the day, December’s Chicago Purchasing Managers’ Index and November’s Pending Home Sales reports are due. However, the figures will hardly be able to affect USD dynamics as the prevailing risk-on tone keeps pushing high-yielding assets higher while pressuring the safe-haven dollar.
In commodities, oil prices retain a mild bullish bias while deriving support from the $50.80-$50.70 area this week. Brent finishes the year on an upbeat note amid the continuing rally in stock markets due to the resolved uncertainties, including Brexit deal and US fiscal stimulus measures. The futures continue to stay above the ascending 20-DMA, suggesting the prices could extend the ascent at the start of 2021 if the OPEC+ countries refrain from further rise in crude oil production. The developments surrounding the coronavirus pandemic will matter for the oil market as well.
Nathan Lambert, Head of Global FX Analytical Department