Written by Investing.com Staff, Investing.com
Dow Closes Up in Slow Session Amid Brexit Deal, Stimulus
The Dow closed higher after a shortened session on Christmas eve, with tech stocks gaining as the long-awaited stimulus is delayed.
The Dow Jones Industrial Average rose 0.24%, or 71 points. The S&P 500 was up 0.39%, while the Nasdaq Composite increased 0.26%.
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Republicans and Democrats in the U.S. House of Representatives blocked attempts to alter a $2.3 trillion aid and government spending package, which was unanimously passed by Congress on Monday. Democrats aimed for quick passage of legislation providing $2,000 in direct payments to Americans after President Donald Trump unexpectedly insisted on the provision.
Things were more productive on the other side of the pond, with the UK and EU finally hammering out a Brexit deal, years later and moments before the deadline.
Financials, industrials and energy stocks were the worst performers, while technology was the best, with the exception of Alibaba (NYSE:BABA), which slumped 13% after China said it is investigating the company for anticompetitive practices. Shares are down 30% since hitting all-time high in October. Alibaba, built by billionaire Jack Ma, said it will cooperate with regulators.
Markets closed at 1:00 PM ET on Thursday and will be closed for Christmas holiday on Friday. See you Monday!
U.S. stocks higher at close of trade; Dow Jones Industrial Average up 0.70% (Wednesday)
Dow Rises as Bulls Shrug off Stimulus Setback (Wednesday)
Dow Ends Higher as Energy, Financials Shine; Tech Slips (Wednesday)
European stocks seen higher amid hopes for Brexit trade deal
Japan stocks lower at close of trade; Nikkei 225 unchanged (Friday)
Japan stocks higher at close of trade; Nikkei 225 up 0.54% (Thursday)
Asian Stocks Up as Possible Brexit Deal Brings Christmas Cheer
The dollar was down on Thursday morning in Asia, with investors retreating from the safe-haven greenback and turning to the pound over expectations of an imminent Brexit deal that could help the U.K. avoid a turbulent economic rupture come Jan. 1.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.09% to 90.168 by 8:59 PM ET (1:59 AM GMT).
The index has lost more than 6% during 2020 over investor bets that the U.S. Federal Reserve will maintain an accommodative monetary policy and expectations of more fiscal stimulus in 2021 to aid economic recovery from COVID-19.
Some investors forecast that an expected further decline in the greenback will boost stock markets and emerging-market currencies. Rabobank senior FX strategist Jane Foley said in a note:
“The fact that equity indices traded mostly in the green this morning reflects a consensus expectation that Trump will sign the budget into law, although he could wait until the eleventh hour. If this doesn’t happen the dollar could benefit from safe haven buying.”
But longer term the dollar will weaken to $1.23 per euro over the course of next year, the note added.
The USD/JPY pair inched up 0.02% to 103.57.
The AUD/USD pair edged up 0.20% to 0.7587, while the NZD/USD pair inched down 0.01% to 0.7094.
The USD/CNY pair inched down 0.06% to 6.5360.
The GBP/USD pair gained 0.36% to 1.3540. The pound was up 0.2% earlier in the session after rising 0.9% during the previous session, ending three consecutive days of losses. The euro also strengthened 0.1% to $1.22025, adding to its 0.2% gain overnight.
A Brexit agreement will protect some $1 trillion in annual cross-channel trade between the U.K. and the European Union (EU) from tariffs and quotas. Although no official announcement of the deal has been issued by either side, with negotiations still “going through the details” and no final agreement confirmed yet, the agreement will reportedly be announced later in the day.
U.K. Prime Minister Boris Johnson is reportedly ready to reach a deal with the EU, and there were reports that a deal had already been reached.
Some investors were positive about the prospects for a deal, even as warnings that talks were still under way were issued. Westpac macro strategist Tim Riddell said in a note:
“This time it really does appear that a deal will be struck just in time for Christmas.”
However, the note was cautious about the pound’s prospects even if a deal does transpire:
“If a deal does transpire on Dec. 24, the pound is likely to make further gains” toward $1.40, “but potential for a more substantial move towards 1.4500 now seems unlikely given how positions exhaustion is so prevalent.”
Brexit expectations helped to overshadow U.S. President Donald Trump’s demands to a COVID-19 aid bill, which he termed “a disgrace“, that was passed by both the House of Representatives and the Senate earlier in the week.
The bill needs to be signed by Trump in order to become law, and his reticence threatens a government shutdown after the Christmas holidays.
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Gold prices rose on Thursday but still finished with a weekly loss, after the twist to a U.S. coronavirus stimulus package and the dollar’s unexpected gains in recent days prevented the yellow metal from extending a three-week rally.
Benchmark gold futures for February delivery on New York’s Comex settled up $5.10, or 0.3%, at $1,883.20.
But for the holiday-shortened week ahead of Friday’s Christmas, the contract was down 0.3% by 12:56 PM ET (17:56 GMT), after rallying some $100, or 6%, over three prior weeks.
The spot price of gold, which algorithms and hedge funds use to decide the direction for futures, hovered at around $1,878, up 0.4% on the day and down 0.1% on the week.
Gold prices were thrown about this week as the dollar rebounded sharply from 2-½ year lows after the British pound crumbled on fresh Brexit woes.
Gold has also been yanked around since Sunday’s deal by U.S. Congress on a $900 coronavirus stimulus and $1.4 trillion in federal government funding. Both those packages are now in a limbo after President Donald Trump’s refusal to sign them, particularly due to his objection over a measly $600 in personal Covid-19 aid for needy Americans approved by his own Republican party.
Rival Democrats in Congress have thrown their support behind Trump in a rare show of unity with the president, while Republicans have shown no signs of acceding to the president’s demands despite his signature being required to prevent a federal government shutdown.
Gold tumbled early in the week on the dollar’s strength before recovering in recent days on the stimulus drama. The rebound fell short, however, of its Friday settlement of $1,888.90, resulting in the weekly loss.
For the week ahead, gold analyst Haresh Menghani said in a post on fxstreet.com.:
“The incoming Brexit-related headlines, along with developments surrounding the coonavirus saga might infuse some volatility in the global financial market. This, in turn, might assist traders to grab some short-term opportunities.”
See also:
- Gold Up Over Cautious Stimulus Hopes (Tuesday)
Crude prices rose Thursday but were unable to extend their seven-week rally as a new strain of the coronavirus discovered in Britain and feared to be spreading brought an unceremonious end to oil’s longest winning streak since April 2019.
Wildly surging U.S. case counts of the original Covid-19 virus also dampened the enthusiasm of oil bulls despite supportive inventory data for last week released by the government on Wednesday.
New York-traded WTI, the key indicator for U.S. crude, settled up $1.10, or 2.3%, at $48.12 per barrel. For the week, however, it fell 2%.
London-traded Brent, the global benchmark for crude, was up 10 cents, or 0.2%, at $51.34 by 1:17 PM ET (18:37 GMT). For the week, it slid 2.2%
The week was shortened by Friday’s Christmas holiday.
Prior to that, oil prices had rallied seven weeks in a row on bets that people across the world might soon be able to travel freely as millions of doses of coronavirus vaccines were prepared for delivery after approval by relevant health authorities.
The rally was halted by this week’s news that countries across Europe and beyond had barred U.K. travelers to prevent the spread of a new Covid-19 strain discovered in Britain. U.K. health authorities said the new variant was 70% more transmissible.
The U.S. Centers for Disease Control and Prevention also warned earlier this week that the new strain of the virus was probably already in America, only undetected.
Oil’s weekly loss came despite the U.S. Energy Information Administration reporting on Wednesday largely positive inventory numbers for crude, gasoline and diesel-led distillates during the week ended Dec. 18.
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Natural Gas (Hellenic Shipping News)
US working natural gas in storage posted its first triple-digit build of the heating season last week as South Central accounted for the largest regional draw on cooler weather and record-high LNG feedgas demand.
Storage inventories decreased by 122 Bcf to 3.726 Tcf for the week ended Dec. 11, the US Energy Information Administration reported Dec. 17.
The withdrawal was weaker than an S&P Global Platts survey of analysts calling for a 127 Bcf pull. Responses to the survey ranged from a 103 to 145 Bcf withdrawal. However, the pull was stronger than the 97 Bcf draw reported during the same week last year as well as the five-year average withdrawal of 105 Bcf, according to EIA data.
The draw was also stronger than the 91 Bcf withdrawal reported the week prior.
Residential and commercial demand grew by 3.5 Bcf/d week on week and power demand gained 1.6 Bcf/d, according to S&P Global Platts Analytics. Incremental power demand was also spurred by falling wind generation, which declined by nearly 15 GWs, the equivalent of 2.5 Bcf/d in gas-fired generation. Total supply was up a marginal 100 MMcf/d week on week as lower US production was offset by a 700 MMcf/d increase in net Canadian imports.
Storage volumes now stand 284 Bcf, or 8.3%, more than the year-ago level of 3.442 Tcf and 243 Bcf, or 7%, more than the five-year average of 3.483 Tcf.
The NYMEX Henry Hub January contract slipped 3 cents to $2.64/MMBtu in trading following the release of the weekly storage report at 10:30 am ET. The remaining winter strip, February and March, also dipped 3 cents to average $2.63/MMBtu, a decline of 5 cents from the week prior.
Entering the Dec. 17 EIA report, the prompt-month January NYMEX contract has been in a well-defined range this week – oscillating between $2.60 and $2.70/MMBtu. The relatively narrow range appears to be linked to weather model uncertainty entering January with some models pointing to a colder regime, while others predict a milder background state, according to S&P Global Platts Analytics.
So far this withdrawal season, inventory has declined by a net total of 229 Bcf. Over the past five years, stocks have decreased by an average of 497 Bcf by this time of the heating season.
Platts Analytics supply and demand model currently forecasts a 166 Bcf withdrawal for the week ending Dec. 18, which would shrink the surplus versus the five-year average by an additional 39 Bcf as cooler temperatures spike US-level demand week over week.
Colder temperatures have boosted residential and commercial demand by nearly 5 Bcf/d week on week. Colder temperatures also boosted power and industrial demand by 500 MMcf/d and 900 MMcf/d, respectively. Total supply could not keep pace with demand, with supply falling by about 400 MMcf/d – led by a 200 MMcf/d decline in US production.
Source: Platts
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Oil Bucks Two-Day Drop on Supportive U.S. Inventory Data
