US futures are rising in stimulus bets

Congress leaders closed a $ 900 billion coronavirus relief deal Wednesday that includes another round of direct payments to households. After months of deadlock, the emerging deal represented a breakthrough at a critical time in the pandemic, with vaccine distribution underway, but hospitalizations reached all-time highs.

Investors generally think a new dose of stimulus is needed to tighten the economy by the end of winter, and widespread vaccines have the potential to control the virus by 2021. Growing cases appear to have affected sentiment. of consumers, weighing on retail sales, and there are new business restrictions in some states.

“Stimulus is key,” said Mary Nicola, portfolio manager at PineBridge Investments.

“Any stimulus is a good stimulus right now, especially when you are going through a difficult piece,” Ms. Nicola. “This will provide a little more momentum to the recovery.”

Weekly data on initial claims for unemployment benefits will shed new light on the state of the economy at 8:30 a.m. ET. Unemployment claims rose earlier this month in a sign of a further decline in the labor market. They probably retreated slightly the week ended Dec. 12, although they remained at high levels, economists predicted.

Ahead of the New York bell, Lennar shares rose nearly 4% after the homebuilder said first-quarter home deliveries and orders would be stronger than analysts expect.

International markets also advanced on Thursday. The Stoxx Europe 600 across the region gained 0.5%, led by shares of economically sensitive commodity producers and retailers alongside media companies. China’s Shanghai composite index finished 1.1% higher. The Japanese Nikkei 225 rose 0.2%.

Among European stocks, WPP shares rose nearly 5% after the advertising giant said sales were recovering faster than expected from the coronavirus shock. Rio Tinto’s London-listed shares rose 1.4% after the mining company appointed chief financial officer Jakob Stausholm as the new chief executive.

In bonds, the yield on 10-year Treasury bills rose to 0.926% from 0.920% on Wednesday. The dollar expanded its recent slide. The WSJ dollar index fell 0.4%, after falling to its lowest level since April 2018 on Wednesday.

This decline came after the Federal Reserve said $ 120 billion a month in asset purchases would continue until they had made substantial progress toward their employment and inflation targets. The updated guide stresses that the central bank will continue to support financial markets for some time to come, Ms Nicola of PineBridge said.

The stimulus package being discussed in Washington was expected to include, along with direct controls, $ 300 a week in improved unemployment insurance and funding for vaccine distribution. Congress aides noted that negotiations were continuing and that no final agreement had been reached.

The time is set. Lawmakers hope to attach the aid bill to a year-round spending bill needed to keep the government running after its current funding expires at 12:01 a.m. Saturday.

“Obviously we’re getting very close to the time period when it’s pretty complicated to get a deal,” said Edward Park, Brooks Macdonald’s chief investment officer. “Providing some stimuli here is certainly a positive increase.”

Indications that the UK and the European Union could reach a trade deal before Britain leaves the bloc in early 2021 have also boosted markets in recent days, Park said. Last-minute negotiations focused on the Bank of England’s decision on Thursday to keep the benchmark interest rate suspended at 0.1%, keep public bond purchases and extend a financing program for banks .

Restrictions designed to stifle the coronavirus will weigh on the UK economy this quarter and during the first three months of 2021, the central bank said.

The weakening dollar gave a boost to commodity markets. Gold futures gained 1.2% to $ 1,881.10 a troy ounce.

Three-month copper advances rose 1.4% to $ 7,920.50 a tonne on the London Metal Exchange.

Write to Joe Wallace to [email protected]