Global shares rise, buoyed by relief after UK travel rules were eased, while Trump signals he may not sign off on $900 billion stimulus bill

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Global shares rise, buoyed by relief after UK travel rules were eased, while Trump signals he may not sign off on $900 billion stimulus bill
A man is restrained by a police officer at the Port of Dover.Dan Kitwood/Getty Images
  • Equities rise, lifted by relief over relaxation of rules on UK arrivals in France, which has boosted the pound.
  • President Donald Trump has criticized the $900 billion bipartisan stimulus bill that took months to pass, stoking concern he may hold it up.
  • A decline in the dollar helped gold and silver, which proved to be some of the better-performing commodities, putting gold on track for its first monthly gain since July.

Global equities, gold and the pound rose on Wednesday, despite President Donald Trump stunning markets by signalling he may refuse to sign off on the stimulus bill, which took months to agree.

US stock futures were up between 0.2 and 0.3%, suggesting a modestly higher start to trade later. In Europe, most major indices gained after France softened its stance on people and freight entering from the UK, where millions are under lockdown after the emergence of a more contagious strain of COVID-19.

Trump on Tuesday criticized the $900 billion COVID-19 relief package passed by Congress.

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In a video, he conflated the bill with another measure funding the federal government, criticizing the inclusion of foreign aid, and said the $600 stimulus checks were too small. He asked Congress to increase the amount to $2,000.

IG analysts said in a note: "It has been widely recognised that a $600 per person direct payment will do little to boost the economic outlook, and Trump has called for an enhanced payout closer to $2000. Should he succeed this would no doubt provide a boost for markets, yet there is also a chance his opposition could take us back to square one."

Read more: 'It could be a Roaring 20s that will end badly': An equities chief who oversees over $7 billion shares his investing playbook and major predictions for 2021 and beyond

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With a series of COVID-19 vaccines in the works, the stock market has rattled back to record highs this month, as investors anticipate how mass immunization will help economic activity return to more normal levels in 2021.

But the prospect of another generous stimulus package for the US economy has been a key catalyst for the strength in the markets.

Meanwhile, in Europe, the STOXX 600 rose 0.2%, led by gains in retail and telecommunications shares. Frankfurt's DAX was up 0.5%, boosted by gains in shares of automaker Daimler, while London's FTSE 100 was one of the regional laggards, down 0.3%, on account of a relief rally in the pound after the easing of travel restrictions.

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The pound gained fairly broadly, rising 0.5% against the dollar, by 0.3% against the yen and rising 0.2% against the euro. Sterling has risen by 0.5% against the dollar so far this month, even with the clock ticking down towards the UK's full exit from the EU on December 31. But its gains have been eclipsed by those of the euro, which has risen by 2.5% against the greenback.

Britain, which has the highest COVID-19 death rate in Europe, is still in talks with the EU over trade once it leaves the single market, even though the public referendum on Brexit took place nearly five years ago.

"Fishing continues to be a stumbling block and the clock is ticking as the transition period ends in over one week. Yesterday afternoon there was talk of a 'final push' being attempted it was the sort of rhetoric that we have heard before," CMC markets analyst David Madden said.

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Read more: Deutsche Bank says you need to own these 10 telecom stocks as vaccine progress spurs a 2021 recovery for beaten-down sectors

On the commodity markets, precious metals got a lift from a decline in the dollar, which boosted gold by 0.3% and silver by nearly 1% on the day.

With the prospect of mass vaccination and economic recovery a reality, gold has struggled to retain its popularity among investors, given that it often serves as a safe-haven in times of economic, or financial-market, stress.

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However, the tumble in the dollar has given some support to gold, as investors typically take advantage of weakness in the US currency to divert their into dollar-denominated assets. The gold price is on course for a gain of nearly 5.5% in December, its first monthly increase since July.

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