Análisis de mercado diario

US stock futures are rising, ahead of Joe Biden’s presidential inauguration later on Wednesday. S&P 500 futures are trying to reassert themselves back above the 3800 handle in a bid to erase last week’s losses.

The coronavirus has already nullified any chance of large-scale gatherings for the event. Instead, Washington DC will be filled with some 25,000 National Guard soldiers while the White House and the Capitol building are surrounded by tall fences, in a bid to stem any threat of violence after Capitol Hill was swarmed by a pro-Trump mob earlier this month.

While markets may not react much to the subdued fanfare surrounding today’s inauguration, investors are already peering over the day’s proceedings and trying to anticipate what this incoming administration may herald for markets.

Here is a sampling of some policy moves to look out for, and the potential assets that could be affected:

• More fiscal stimulus

President-elect Biden has already unveiled a $1.9 trillion stimulus plan, with potentially more to come. His nominee for US Treasury Secretary, Janet Yellen, told the Senate on Tuesday that the economic rescue package is the immediate priority, and cited the need to “act big”.

WATCHLIST: US Stocks, Dollar, Gold

• Higher taxes and regulations

Given the more pressing concerns surrounding the US economic recovery, there is less of an imminent risk that the Biden administration would push through traditionally Democrat-favoured policies such as tax hikes and heightened regulations. Still, that isn’t stopping investors from already trying to ascertain the likelihood and the potential timeline for such an agenda to eventually force its way through sometime over the next 4 years.

WATCHLIST: Banking stocks, Big Tech

• Persisting US-China trade tensions

Yellen used strong words when addressing US-China relations moving forward, dashing hopes that there could be a major reset in ties between the world’s two largest economies under the new POTUS. At least investors can bid adieu to Trump’s policy-by-tweets that shook global markets at unpredictable intervals, and also perhaps to the in-your-face nature of the trade war that the world had grown so accustomed to in recent years.

WATCHLIST: Chinese Yuan, Asian stocks

• Green agenda to the fore

During the presidential debates, then-Democratic presidential candidate Biden already made his ambitions known to “transition” America away from its dependence on Oil. The green agenda may be made clear on day one of the Biden administration, with the incoming POTUS reportedly set to cancel the Keystone XL Pipeline which moves oil across the US-Canada border.

WATCHLIST: US crude, Big Oil, Tesla, FXTM Green index

Indeed, a massive burden now falls on the shoulders of the 46th President of the United States. Not only does Biden have to try and heal a politically-divided nation, but his immediate gargantuan task is to help the pandemic-ravaged US economy recover.

Even as risk assets bask in the potential near-term upside based on the US economic recovery prospects, the road ahead requires investors to remain vigilant as to what President Biden’s policies could mean for broad asset classes.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Asian stocks are mixed while US futures are edging lower, even after US President-elect Joe Biden unveiled his US$1.9 trillion fiscal stimulus plan. There appears to be a some “sell-the-news” price action in equities, given that a lot of the optimism surrounding another injection of US fiscal stimulus had already been priced in ahead of the keenly-awaited announcement.

Markets are also understandably apprehensive following Biden’s foreboding remarks in addressing his proposal’s costs. A seemingly exhausted stock market reacted to the threat of higher taxes, and the intended hike in the minimum wage, by taking some risk off the table and booking in some profits.

Promise of more fiscal stimulus may come with caveats

There’s already chatter that the incoming Biden administration may not stop at just US$1.9 trillion and could roll out more fiscal stimulus. Such expectations have in recent past buoyed risk assets.

However, if the incoming fiscal support is accompanied by more risk-sentiment dampeners, such as the threat of heightened regulations, that may not have the intended booster effect on equities.

Pandemic woes still evident

Investors will have plenty to digest over the long holiday weekend for US markets. Besides the promise of more fiscal stimulus, market participants have to reconcile the still-heady heights in stock markets with the sobering realities amid the pandemic. Covid-19 cases are still raging throughout the US and Europe, and the vaccine’s rollout needing time to have its intended effect on the real economy.

In the meantime, the economy’s dire need for more support couldn’t be starker. Thursday’s weekly initial jobless claims rose back towards the one million mark to post its highest figure since August. More signs of economic angst may also be unveiled later today. Retail sales may show zero growth in December, while consumer confidence is expected to have dipped this month.

Gold climbs as Powell hushes tapering talk

Spot Gold got a slight lift as US 10-year yields dipped to the 1.11 percent level, after Fed Chair Jerome Powell poured cold water on talks surrounding a potential pullback in the central bank’s bond-buying programme. Although the 10-year yields remain significantly lower than pre-pandemic levels, they have stayed stubbornly above the psychologically-important one percent mark since last week.

The recent steepening of the yield curve indicates that markets are still optimistic about the US economic outlook and the inflation outlook. And with the Fed Chair pledging to provide ample warning time before any such tapering, so as to avoid a repeat of the infamous ‘taper tantrum’ of 2013, Gold bulls can take heart from the continued central bank support that should limit the precious metal’s downside for a while more.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

There were chaotic scenes on Capitol Hill on Wednesday, as it was breached by pro-Trump protestors. Lawmakers were in the middle of a debate over the legitimacy of the November presidential election results, before they were driven from their chambers by the mob. The joint session in Congress has since resumed, and the counting of the electoral votes from the November presidential election is back underway at the time of writing.

Still, markets deemed such events as mere “noise”, and didn’t deter them from offering their reaction to the “blue wave”.

Dow climbs on Democrats’ Senate sweep

Democrats were declared winners of both Georgia Senate runoffs, giving them political control of the White House, the Senate, and the House: a "blue wave". All this means that incoming US President Joe Biden, once he is inaugurated on 20th January, would have a much easier time implementing his agenda.

And such an agenda could make for more US fiscal stimulus, which is set to benefit key sectors of the real economy. With such a narrative in mind, no surprise that the Dow Jones index was the best performer out of the three main US equity benchmarks, given its larger exposure to real economic sectors such as industrials, consumers, and energy. These three sectors account for about 40 percent of the total weightage on the Dow, which climbed 1.44 percent in the Wednesday US session.

Dow Jones futures are now pushing higher, and with the MACD tilting over to the bullish side, it suggests that the 31,000 line could soon be breached as this nearly-125-year-old index posts new record highs.

What does the “blue wave” mean for Big Tech?

The campaign against Big Tech had received bipartisan support, even before the November presidential election. So the heightened regulatory scrutiny would have ensued anyway, no matter who won control of the White House and the Senate. However, with Democrats now holding ultimate sway on Capitol Hill, it raises the spectre of tougher regulations and also a potential tax hike.

Such a combo of dampeners suggests that tech stocks would have to put in a lot more effort to climb over the next couple of years. With such expectations in mind, the tech-heavy Nasdaq 100 fell by another 1.4 percent on Wednesday, extending its week-to-date declines to 2.06 percent. FAANG stocks felt the brunt as the “blue wave” came crashing down on them:

• Facebook: -2.83%
• Amazon: -2.49%
• Apple: -3.37%
• Netflix: -3.89%
• Google (Alphabet): -0.99%

However, with Nasdaq futures now pushing higher, it suggests that tech stocks are set to pare losses from the first half of the week.

Tesla: a potential “blue wave” winner

Besides stocks in the real economy, green stocks such as Tesla are set to enjoy tailwinds under the Biden administration. The green agenda is very much aligned with the Democratic platform, with Biden even signalling his intentions for America to pivot away from Oil during one of the presidential debates.

No surprise then that Teslas stock posted a new record high, closing just below the $756 mark. Tesla CEO Elon Musk is now just about US$3 billion shy of claiming the top spot on the Bloomberg Billionaires Index, a title which Amazon CEO Jeff Bezos currently holds. Given the expected policy tailwinds for the EV sector over the coming years, Tesla's share price may well build on its mercurial 743 percent gain from 2020.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

This year really has started with a bang in so many ways - dreaded lockdowns, record highs in equity markets and now the first African-American to win a US Senate seat in Georgia. We are still awaiting the other seat up for grabs in the Senate runoff, but fellow Democratic contender Ossoff is clinging to a narrow lead in the second contest that will decide which party controls the upper chamber of Congress. That lead of just over 16,000 voted may well lead to a recount and so more time needed to confirm what the markets are already positioning for.

Bad for…

US government bonds have sold off sharply on the chances of more stimulus and government spending feeding through to inflation, with the US 10-year treasury yield hitting 1% for the first time in nine months. Yields rise when bond prices fall. We’ve already had a short-term fiscal package after much wrangling between the sides of the aisle, but the market is now expecting something much larger and longer lasting. Remember too that Janet Yellen will be at the helm of the Treasury, who is an ardent fan of more money for households and businesses. This is bad for those mighty twin deficits that are always a long-term drag and dark cloud over the Dollar.

Talking of the mighty, tech stocks have also been hit with investors wary of tougher antitrust regulations and higher corporate tax rates for the sector, though this may be a headwind further out. The Nasdaq gained nearly 48% last year with the pandemic boosting tech companies and lower bond yields prompting investors to place higher valuations on growth companies’ earnings. The 12,500 level has acted as support so far today but a decisive break of this would see the December lows in play around 12,218.

Good for….

Commodity prices are enjoying the blue ride with economic growth a central plank of the spending plans of the Democrats. Oil prices have hit levels not seen since February 2020 with prices boosted of course by the Saudi pledge to cut output as well. The 100-week moving average has been taken out today with bulls looking to $55.88/$60 resistance next. Copper is surging due to President-elect Biden’s plans for a green stimulus and has topped $8,000, the highest point in seven years.

More economic growth through infrastructure spending and stimulus drives small caps and cyclical industries the most, where earnings have been depressed for some time. So, we have seen the US small-cap Russell 2000 index make new highs which contains many economically sensitive industries, while the UK FTSE is roaring higher, up close to 3.7% due to half its index weighting being in banking energy and industrials and materials.

Initial market reactions to big risk events are always telling, but co-operation between both parties in the US will still be needed. Historically markets prefer a Democrat President and split Congress with average returns in stocks of around 13.6%. However, markets can still perform under the clean Democrat sweep, with average returns close to 10% since the second world war.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

US stocks kicked off the year in dreadful fashion.

The S&P 500 posted a 1.5 percent drop while the Dow Jones shed 1.25 percent on Monday, which was their biggest single-day decline respectively since the week before the November US elections. The S&P 500 experienced its worst start to the year since 2016, as investors battled with persistent pandemic woes amid rising global coronavirus infections that exceeded 85 million. The US posted a record high for daily cases while the UK reimposed a nationwide lockdown until February 15.

Still, at the time of writing, US equity futures are pushing higher, potentially setting up yet another episode of turnaround Tuesday.

Also, investors have to contend with looming US political risks once more, with Georgia on their mind.

And unlike the languid pace of the timeless tune, Georgia On My Mind (first recorded in 1930 by Hoagy Carmichael before being propelled to global fame by Ray Charles in the 1960s), the events out of the state later today has the potential to jolt markets once more.

Why are the Georgia Senate elections important?

The November race for these two Senate seats did not produce a clear winner; today’s runoffs aim to settle the score. It’s a high-stakes contest, as the results from take two of this race could determine whether Democrats will have enough political mass to push their agenda through over the next two years.

As things stand, the Senate makeup currently tilts towards Republicans 52 to 48. Should Democrats win the two seats that are up for grabs, that would make it an evenly-split 50 seats each for Republicans and Democrats. However, that would then set up incoming Vice-President Kamala Harris with the tie-breaking vote, enabling her to force through the will of the Democrats, and that of President-elect Joe Biden.

How might stocks respond to the results?

This is a tricky one.

A “blue wave” scenario could still materialize, with Democrats having ultimate sway in Washington DC. Such a unified government could well push through larger rounds of fiscal stimulus in the near-term, which is a positive for US equities.

However, investors would also be cognisant of other policies that are typically associated with Democratic lawmakers, such as tax hikes or heightened regulations. And such measures may serve as potential dampeners on stock prices.

In the immediate aftermath of the November polls, US stock markets had clearly revelled at the thought of a gridlocked government, with the S&P 500 climbing 11.8 percent since the eve of the presidential election.

Investors will now have to navigate these political uncertainties in ascertaining whether benchmark indices should be pushed to new record highs as a result of Tuesday’s Senate runoffs.

How soon will we know the results?

Keep in mind that the outcome of today’s polls could take days to be declared as was the case for the November elections, which took the state 10 days before officially declaring the results. On top of that, the voting outcome could still face legal challenges thereafter as well.

Hence, US markets could be blanketed with a layer of political uncertainty until the official results are known.

Dollar likely not spared

Besides stock benchmarks, investors’ initial reactions to the Georgia Senate runoffs may also be manifested in the Dollar index (DXY).

Ramped up expectations for the so-called “blue wave” may heap more downward pressure on the Greenback on hopes that incoming fiscal stimulus may face less political resistance and potentially boost US inflationary pressures, thus eroding the Dollar’s appeal. However, should Republicans be seen as having the advantage in this latest political contest, that may offer support for the beleaguered Dollar, and push the DXY back above the psychologically-important 90 mark.

And with Georgia on many an investor’s mind, perhaps the pandemic woes can be put on the back burner, at least for just a short while.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.