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U.S. and European equity futures climbed along with most Asian shares as investors took some comfort from further stimulus bill negotiations and the impending deployment of the first vaccine in the U.S. The pound advanced after Brexit talks were extended past a Sunday deadline.
S&P 500 futures gained about 0.5%, with the first deliveries of the Pfizer Inc.-BioNTech SE vaccine in the U.S. due to arrive Monday morning. Meantime, a bipartisan group of lawmakers will unveil a $908 billion pandemic relief bill the same day, although there is “no guarantee” Congress will pass it, a key negotiator said. The dollar dipped and Treasury yields were steady.
Sterling pared some early gains but remained firmer against the dollar. The U.K. and European Union said they will continue talking about a trade agreement, raising hopes of a deal. In Asia, improving business confidence helped Japanese stocks rally to a more than two-year high earlier Monday. Elsewhere, the offshore yuan outperformed.
FX Overnight News:
- U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed over the weekend to go the “extra mile,” ignoring a self-imposed Sunday deadline and giving negotiators another shot at closing a trade deal.
- The talks looked doomed to failure at the end of last week, with Johnson stating that there was "a strong possibility" the two sides would fail to strike a trade deal. However, a weekend of intense diplomacy appears to have injected fresh momentum into the long-running process, increasing hopes a deal can be done this week.
- At stake is around $1 trillion in annual trade at risk of facing tariffs and quotas if a deal cannot be reached before transition arrangements end on Dec. 31.
- Elsewhere, the U.S. Food and Drug Administration granted authorization of the Pfizer/BioNTech Covid-19 vaccine late last week. The U.S. will see its first deliveries of the drug starting this week.
- There is also the possibility of additional fiscal stimulus in the U.S. with a bipartisan bill for a $908 billion Covid-19 relief package set to be introduced in Congress later in the day.
- Reuters reported that it could possibly be split into two separate packages as the lawmakers who prepared the bill seek to win approval from both Republicans and Democrats.
- Germany will enter a lockdown from Wednesday that will see the closure of non-essential stores as coronavirus cases surge during the winter period.
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December 14, 2020