Dow Futures Slip Lower With Coronavirus Stimulus Plans, Brexit Talks in Focus

The Monday Market Minute

  • Global stocks slip from all-time highs as investors look to stimulus progress in the United States and the final hours of Brexit trade talks in Brussels.
  • Lawmakers are likely to reveal details of their bi-partisan coronavirus relief bill later today, but a December 11 deadline for funding federal agencies looms.
  • U.K. Prime Minister Boris Johnson and EC President Ursula von der Leyen are set to speak later today as reports suggest final Brexit trade talks are set to collapse.
  • The White House is reportedly ready to sanction several high-ranking China lawmakers amid allegations of interference in Hong Kong’s parliamentary elections. 
  • U.S. coronavirus hospitalizations hit a record high of 101,500, with new cases rising at an average of nearly 200,000 each day.
  • Wall Street futures point to a softer open heading into a quiet week for data and earnings, highlighted by Costco, Oracle and Broadcom on Thursday.

U.S. equity futures slipped from their all-time highs Monday as markets awaited details of a near $1 trillion coronavirus relief billion from Congress while tracking developments in the final hours of Brexit talks. 

Reports that the White House is set to unveil fresh sanctions on lawmakers in China, accused of interfering in the parliamentary elections in Hong Kong, as well as record COVID hospitalization rates in the United States tempered gains in overnight trading, with the U.S. dollar posting solid gains in risk-averse trading in Asia and Europe.

Lawmakers are likely to publish details of their compromise relief bill later today, although the $908 billion package must pass both the House and Senate before a December 11 deadline for the funding of federal agencies.

Last week’s November employment report, which showed a net jobs gain of 245,000 — the weakest since May — as well as the ongoing rise of coronavirus infections, stay-at-home orders and hospitalizations underscore the need for fresh stimulus heading into the start of 2021. 

U.S. equity futures look set to slip lower to start the week, after all three benchmarks closed at record highs on Friday, with contracts tied to the Dow Jones Industrial Average indicating a 150 point opening bell decline and those linked to the S&P 500 priced for a 15 point pullback. Nasdaq Composite futures are suggesting a modest 20 point decline.

Market bulls will note the rollout of Pfizer  (PFE) – Get Report and BioNTech’s  (BNTX) – Get Report coronavirus vaccine in the United Kingdom, which is expected to begin tomorrow, as well as the Food & Drug Administration’s Thursday decision on Emergency Use Authorization, which could trigger the start of inoculations in the United States ‘within hours’, according to health officials.

European stocks were modestly lower, however, amid reports of stalled 11th-hour Brexit talks and a make-or-break Monday call between U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen that offset a stronger-than-expected reading for October industrial production out of Germany.

The Stoxx 600 benchmark, the region’s broadest measure of share prices, was marked 0.40% lower in the opening hours of trading, while a softer pound helped the FTSE 100 gain 0.33% in London.

Global oil prices retreated from last week’s rally, following on from OPEC’s decision to pare its 7.7 million production cuts by just 500,000 barrels per day starting in early January. A firmer U.S. dollar also clipped prices following three consecutive weekly gains.

WTI crude futures contracts for January delivery, the U.S. benchmark, traded 43 cents lower from their Friday close in New York and were changing hands at $48.89 per barrel in early European dealing, while Brent contracts for February delivery, the new global benchmark, fell 43 cents to $45.83 per barrel.

Overnight in Asia, reports of sanctions on high-ranking members of the China Communist Party kept risk appetite in check as traders worried that the outgoing Trump administration would accelerate tensions between Washington and Beijing. 

Japan’s Nikkei 225 closed 0.76% lower on the session at 26,547.44 points while the region-wide MSCI ex-Japan benchmark slipped 0.1% lower heading into the final hours of trading.