By Geoffrey Smith
GossipMantri.com – Global stocks tumble and the dollar soars as UK discovers new strain of Covid-19 coronavirus. Congress finally accepts a $ 900 billion relief plan and will likely vote on it later today. Elon Musk is flirting with Bitcoin on Twitter as Tesla shares debut in the S&P 500 (down 6% in pre-market). And oil is down 5% as virus news from the UK removes foam from a too-prolonged rally. Here’s what you need to know about the financial markets on Monday, December 21st.
1. United Kingdom isolated after discovery of a new Covid-19 strain
The UK has announced that it has identified a new strain of the Covid-19 virus that is more contagious than the strain that has swept the world this year.
There is no information yet to suggest that it is more virulent than the original strain, or that vaccines already approved or under development will be less effective against it. The Food and Drug Administration on Friday approved Moderna’s mRNA-based vaccine, the second drug to receive formal clearance from U.S. regulators.
Countries from France to India responded by cutting travel links with the UK, while the UK government abruptly canceled plans to ease restrictions on social gatherings at Christmas and instead instituted a new stricter level of regulation that will affect most of England. So far, the new strain is concentrated in the south-east of England, including the capital, London.
The decline of 2% against the dollar and more than 1% against the.
2. The American stimulus plan has finally been accepted; votes due
U.S. lawmakers ultimately approved a $ 900 billion relief package that included $ 600 in household checks and a $ 300 weekly federal unemployment benefit bonus for 11 weeks. It also extends a moratorium on evictions that was due to expire at the end of the year. As such, it covers the contingencies that had the greatest potential to undermine household spending during the winter.
The program would also include assistance to schools, vaccine distribution and small businesses, with $ 280 billion allocated to the payment protection program alone.
Votes in the House and Senate are slated for today, after an emergency bill to maintain government funding was approved over the weekend.
3. Stocks drop, dollar skyrockets on new virus reports
Global equities corrected sharply lower overnight in response to news from the UK, which analysts say presents new risks to the growth outlook for the first quarter.
The dollar, meanwhile, gained across the board, reversing some of its losses in recent weeks, in which optimism about a strong rebound in global growth next year had encouraged the hunt for currency yield. . At 6:25 a.m. ET (11:25 a.m. GMT), the dollar was up 0.9% at 90.802, while the greenback was also up 0.5% against the. It also gained more than 2% against the South African and the Russian, and more than 3% against the Mexican.
U.S. equity markets are also expected to open sharply to the downside, with the news shaking some of the complacency that had been highlighted over the past two weeks. were down 560 points, or 1.9%, while they were down 2.1% and 1.4%, slightly outperforming cyclicals, once again taking the brunt of the sale.
4. Musk flirts with crypto as Tesla debuts in the S&P 500
Tesla (NASDAQ 🙂 shares will trade within day one, after their inclusion in the index takes effect at the end of Friday’s session.
Stocks are shown down more than 6% in pre-market trading, in what looks like a profit-taking now that the big trade of the year – retail investors anticipating forced purchases by passive institutional accounts – is actually completed.
Over the weekend, founder and CEO Elon Musk raised eyebrows by posting to Bitcoin and engaging in a brief exchange with an enthusiast, MicroStrategy founder Michael Saylor, about the possibility of converting large amounts. of liquidity from Tesla’s balance sheet in Bitcoin. The idea was Saylor’s but Musk – obviously – didn’t shoot it down. itself was caught in the risk reduction move on Monday, falling more than 3% to $ 22,671 on the Bitfinex exchange.
5. Froth Exits Oil Market As Demand Fears Rise
The rally in crude oil prices reversed sharply, with futures losing more than 5% after news from the UK cast new doubt on the outlook for near-term demand.
However, vaccine distribution is expected to return to pre-pandemic consumption levels next year, OPEC and the International Energy Agency both said in their latest monthly reports that the recovery would take place in largely in the second semester.
In addition, Ole Hansen, head of commodities research at Saxo Bank, noted that the rally was too prolonged, with speculative long positions in futures contracts up 250 million barrels over the past six weeks until mid-December.
As of 6:25 a.m. ET, WTI was down 5.1% to $ 46.75 a barrel, while Brent futures were down 5.0% to $ 49.67 a barrel.