A global equity rally stalled Monday as investors weighed signs the deployment of a vaccine may be nearing against renewed U.S.-China tensions. Treasuries were steady with the benchmark yield near its highest in nine months at just under 1%.

Asian shares traded mixed with Hong Kong stocks underperforming, while U.S. and European contracts edged lower. The S&P 500 Index notched a fresh all-time high on Friday. Testing the positive sentiment Monday was news that the U.S. is preparing sanctions on some Chinese officials. The dollar edged higher.

Elsewhere, oil retreated after a fifth straight weekly advance. Australian bonds fell. The pound weakened amid concern about a Brexit deal.

FX Overnight News:

  • The sell-off began after Reuters exclusively reported, citing sources, that the United States was preparing sanctions on at least a dozen Chinese officials over their alleged role in Beijing's disqualification of elected opposition legislators in Hong Kong.
  • The move comes as President Donald Trump's administration keeps up pressure on Beijing in his final weeks in office.
  • "The vaccine will break the link between mobility and infection rate, allowing for the strongest global GDP growth in more than two decades," JPMorgan analysts wrote in a note, forecasting global growth of 4.7% in 2021.
  • The U.S. economy added the fewest workers in six months in November, with nonfarm payrolls increasing by 245,000 jobs last month, much lower than expectations for a 469,000 increase.
  • A bipartisan group of Democrats and Republicans proposed a compromise $0.9 trillion package that leaders on both sides appear open to agreeing to.
  • In currencies, investor focus is on a last-ditch attempt by Britain and the European Union to strike a post-Brexit trade deal this week, with probably just days left for negotiators to avert a chaotic parting of ways at the end of the year.
  • If there is no deal, a five-year Brexit divorce will end messily just as Britain and its former EU partners grapple with the severe economic cost of the COVID-19 pandemic.

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Posted on

December 7, 2020


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