News

US Stock Futures Plunge Despite Biden’s American Rescue Plan

Equities

Major US stock index futures fell sharply during the past couple of hours despite President-elect Biden unveiling his rescue plan. Biden's stimulus package will total $1.9 trillion and would split between Covid19 response efforts, direct support to households, business, and most-impacted communities. The markets weren't overwhelmed with his announcement, especially as the economic indicators are worrying. The US Initial Jobless Claims rose 965 thousand versus expectations of 789 thousand to signal the impact of the recent COVID19 spread. The Dow Jones Industrial Average futures dropped to 30695, the S&P500 futures declined to 3764, and Nasdaq futures tumbled to 12828.

USD

The dollar index, which measures the greenback against a basket of major currencies, inched higher to 90.44 despite Biden's stimulus plan and Powell's comments. Biden unveiled his $1.9 trillion rescue plan that he believes would support the economy and boost growth to pre-pandemic levels. On the other hand, Federal Reserve Chairman Jerome Powell was selling the idea that the Federal Reserve is far from normalization, and inflation needs to average at 2% for the Fed to act. Despite these negative headlines, the dollar managed to rally, as soaring covid19 cases weighed on risk-sentiment and led the flow to the US dollar. The EURUSD declined to a one-month low of $1.2111, and the risk-sensitive AUDUSD fell to $0.7741, erasing prior gains.

Metals

Precious metals prices continued their flattish trading for the fifth day. Market participants were waiting for further clarity from the Federal Reserve Chairman on the path of monetary policy. Gold bulls were happy by the comments of being far from tapering. The price of a gold ounce hovered above $1850, the price of a silver ounce held steady near $25.50, and palladium futures traded near $2400.

Oil

Oil prices retreated from their highest levels since February 2020, as Covid19 spread is urging for lockdowns in Asia, where oil-demand has recovered the most in the past months. Investors are afraid that these lockdowns will weigh again on demand and lead to a sharp drop in prices if producers failed to deal with supply. The West Texas Intermediate crude February contract dipped to $52.95, and Brent Blend March delivery fell to $55.52.

Major Economic Events

GMT Country Event Expectation Previous

13:30

US

 Retail Sales (MoM) (Dec)

-0.2%

-1.1%

13:30

US

 PPI (MoM) (Dec)

0.3%

0.1%

14:15

US

 Industrial Production (MoM) (Dec)

0.4%

0.4%

15:00

US

 Business Inventories (MoM) (Nov)

0.5%

0.7%

21:30

US

 U.S. Baker Hughes Oil Rig Count

-

267

 

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