U.S. equities futures rose Wednesday as investors looked forward to advances in stimulus talks, the Federal Reserve’s new direction and key economic data.
Futures tied to the S&P 500 rose 0.2%, indicating that the breadth of the market could rise a second day after the New York opening bell. Nasdaq-100 futures fell 0.1%.
Signs of progress toward a new package of fiscal stimulus boosted sentiment on Tuesday, allowing the S&P 500 to break the four-day loss streak. The top congressional leaders noted that they were about to reach an agreement after a day of meetings. Senate Majority Leader Mitch McConnell (R., Ky.) Was optimistic and pushed for bets for lawmakers to draft the new aid package before the holidays and the expiration of several key provisions of the ‘help.
The hopes of the new stimulus package have become the latest catalyst for a market concentration that has raised the S&P 500 index by more than 14% this year, despite the economic downturn caused by the coronavirus pandemic .
“It’s one more excuse for those who missed the rally or who are anyway bullish to buy into it,” said Luca Paolini, chief strategist at Pictet Asset Management. “It simply came to our notice then [a deal is] when they come, the signs are quite clear, ”he added.
The market is choosing to overlook the immediate challenges of the economy, including rising cases of coronavirus and new blockade measures, investors said. The deployment of Covid-19 vaccines this month and the prospects for wider distribution of shots next year have fueled bets that restrictions will be removed, leading to a sharp economic rebound.
“For now, markets are trying to look through this short-term period in the Garden of Eden which is a vaccinated population,” said James Athey, investment manager at Aberdeen Standard Investments. It’s possible that “at some point, we’ll have another of those days, another of those days, where we see a bit of concentrated weakness as the markets catch up,” he warned.
The Federal Reserve will release its latest economic projections and offer guidance on monetary policy on Wednesday.
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Liu Jie / Zuma Press
Meanwhile, investors will gain new insights into the state of the economy when the Federal Reserve issues its latest policy statement and its economic projections around 2 p.m. ET. Money managers will be on the lookout for any new guidance on how long policy makers expect to continue with their current asset purchase program and at what pace.
“If rates are really going to stay that low for so long, if central banks are really going to support the market and feel comfortable using all the firepower at their fingertips, it’s not so crazy that equity markets are where they are. , ”Said Altaf Kassam, Head of Global State Advisors Investment Strategy in Europe.
Surveys of purchasing managers, which will be published from 9:45 am ET, are likely to point to continued expansion in the US, albeit at a slower pace than in recent months.
In the coming weeks, any problems that reduce vaccine launches, such as unexpected side effects or logistical problems, could dampen market sentiment, Kassam warned.
“There will be bumps in the road,” which could bring turbulence back to equity markets, he said. “But we believe the trajectory will go up again next year,” he added.
Prior to the market opening, Tilray’s shares rose 30% in premarket trading after Bloomberg reported that the company is in advanced talks to merge with Canadian cannabis company Aphria. If the two merged, the combined company could be Canada’s largest marijuana producer. Shares of Aphria gained 7.8%.
Abroad, the Stoxx Europe 600 rose 0.8% and the euro rose 0.3% against the dollar. It was previously trading at $ 1.2209, its highest level since April 2018.
Lawmakers working to pass a coronavirus aid bill face two remaining points: aid to state and local governments and protection of responsibilities. Gerald F. Seib, of WSJ, explains why these issues are important and how a compromise can be. Photo: Drew Angerer / Getty Images
Surveys of purchasing managers showed that the European economy remained stable during the first weeks of December, as governments eased some restrictions on the services sector and factory production continued to rise. Businesses were encouraged with the prospect of widespread deployment of effective vaccines in 2021 and reduced jobs at a slower pace since the pandemic began.
Among European stocks, Altice Europe NV jumped more than 20% in Amsterdam after a vehicle controlled by founder Patrick Drahi raised its bid to take over the company after some resistance from shareholders.
Shares in the Galapagos fell nearly 15% after his partner, Gilead, decided not to follow regulatory approval of a Galapagos drug for the treatment of rheumatoid arthritis.
Government bond yields in Europe continued to rise in the hope that the UK and the European Union would reach a post-Brexit trade deal that would strengthen the region’s economies.
German ten-year yields have risen faster than those in Italy this week, narrowing the gap between the two – or the spread – to the narrowest level since late January 2016, according to Tradeweb. On Wednesday, the gap narrowed to 1.078 percentage points, as German yields rose to at least 0.565%, while Italian yields rose to 0.509%.
In Asia, most equity benchmarks ended the day on a high note. Hong Kong’s Hang Seng index rose nearly 1%, while Japan’s Nikkei closed 0.3% higher. The Shanghai composite index was relatively flat.
Write to Mischa Frankl-Duval to [email protected]
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