Dow Futures Drift Lower as Stimulus Talks Stall, COVID Infections Surge; UK Begins Vaccine Rollout

The Tuesday Market Minute

  • Global stocks edge lower as stimulus talks in the U.S. stall and coronavirus case rates continue to surge.
  • Senate leader Mitch McConnell says bi-partisan bill must include federal limits on COVID-related lawsuits, a sticking point that could topple the $908 billion bill.
  • California enters a three-week lockdown that bans all public gatherings, with national cases rising at around 193,000 per day.
  • Britain begins vaccination rollout with 91-year-old Margaret Keenan becoming the first to receive the Pfizer/BioNTech dose. 
  • Brexit talks fail to reach conclusion ahead of EU summit later this week, with investors worried that intransigence on both sides could trigger a hard exit from the bloc later this year.
  • U.S. equity futures point to a softer open on Wall Street with market focus on stimulus talks in Washington and the final push for IPOs from DoorDash and AirBnb.

U.S. equity futures edged lower Tuesday, while the dollar held near two-and-half-year lows and gold prices jumped, as markets looked for a breakthrough in stimulus talks that could inject nearly $1 trillion into the world’s biggest economy while tracking the ongoing surge in coronavirus infections.

Senate leader Mitch McConnell said Monday that he’s not ready to approve a bi-partisan bill that would provide near-term relief for small businesses and struggling workers unless there are limits on COVID-19-related lawsuits written into the legislation. 

However, while his stance could potentially scupper yet another attempt to inject much-needed cash into the economy as job growth slows, lockdowns intensify and coronavirus infections soar, markets are pricing in the impact of at least the $908 billion expected from the current bill. Gold prices, for example, are trading at a two-week high of $1,864.00 per ounce while the U.S. dollar index, a measure of the greenback against a basket of six global currencies, remains within touching distance of its lowest levels since mid-2018.

Still, with California entering a three-week lockdown, New York contemplating a shutdown of indoor dining and cases rising at a daily rate of more than 190,000, risk appetite has dwindled over the past few sessions and looks to be in short supply again Tuesday, even amid headlines noting the first of the Pfizer  (PFE) – Get Report/BioNTech  (BNTX) – Get Report vaccine roll-out in Britain and similar efforts in the United States, which are likely to begin next week.

Futures contracts tied to the Dow Jones Industrial Average suggest an 85 point pullback at the opening bell, while those linked to the S&P 500 are priced for a 14.5 point retreat. Contracts tied to the Nasdaq, which recorded its 48th record closing high of the year last night, are indicating a modest 10 point decline.

In Europe, stocks were weaker despite a stronger-than-expected reading from a key survey of investor sentiment in Germany, the region’s biggest economy, as the failure to complete Brexit talks between London and Brussels put markets on edge just three weeks ahead of Britain’s scheduled departure from the bloc.

The Stoxx 600 index, the region’s broadest measure of share prices, was marked 0.2% lower in the opening hours of trading, while Britain’s FTSE 100 fell 0.4% in London.

Global oil prices were also on the back foot, with traders citing renewed concerns for energy demand amid lockdown orders in the U.S. and stubbornly high case rates in Europe. 

WTI crude futures contracts for January delivery, the U.S. benchmark, traded 18 cents lower from their Monday close in New York and were changing hands at $45.58 per barrel in early European dealing, while Brent contracts for February delivery, the new global benchmark, fell 14 cents to $48.66 per barrel.

In Asia, stocks traded largely in the red in a defensive session that saw benchmark 10-year Treasury note yields hold at 0.936% and the yen rise to 104.03 against the U.S. dollar. That move, in particular, pulled the Nikkei 225 into a 0.3% decline on the session, while losses in South Korea and Hong Kong clipped the MSCI ex-Japan benchmark, which was marked 0.1% lower heading into the final hours of trading.