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The Monday Market Minute

  • Global hit fresh record highs to kick-off the New Year as investors look to a vaccine-lead recovery for the world economy.
  • Better-than-expected factory activity readings push markets higher, offsetting concerns of rising infection rates and new national lockdowns planned in Britain and Germany.
  • Investors eye Tuesday’s Senate run-off in Georgia after the release of an audio tape suggesting President Donald Trump pressured Secretary of State Brad Raffensperger to overturn the November election result. 
  • The dollar extends declines against its global currency peers as sentiment improves, while oil prices near $50 a barrel as OPEC mulls production levels.
  • Equity futures suggest more record highs on Wall Street Monday ahead of the Georgia Senate run-off Tuesday, Fed Minutes Wednesday and December non-farm payrolls on Friday.

Wall Street looks set to kick-off the first day of the trading year in much the same fashion as it closed out the last, with bullish hopes of an vaccine-lead recovery driving risk markets higher and the U.S. dollar to fresh two-and-a-half year lows.

Solid final reading for manufacturing activity in Germany and China added to Monday’s buoyant tone, while the rollout of the latest coronavirus vaccine in the United Kingdom — developed by AstraZeneca  (AZN) – Get Report — offset concerns for a new national lockdown that Prime Minister Boris Johnson has suggested could be only days away.

Here in the U.S., the late 2020 passage of a $2.3 trillion spending bill, which included nearly a trillion on coronavirus relief, has underpinned domestic stocks ahead of a two key run-off elections in Georgia tomorrow that will define the balance of the Senate and the legislative agenda of President Elect Joe Biden.

The importance of that vote, which has attracted nearly $500 million in ad spending and a record 3 million mail-in ballots, was underscored yesterday by the release of a telephone call that suggested outgoing President Donald Trump attempted to pressure Georgia Secretary of State Brad Raffensperger to “find” the votes necessary to overturn November’s election results.

After closing at record highs on New Year’s Eve, U.S. equity futures suggest extended gains for the three major benchmarks Monday, with contracts tied to the Dow Jones Industrial Average indicating a 180 point opening bell advance. 

Tesla  (TSLA) – Get Report shares are set for another all-time peak, after closing at $705 each on New Year’s Eve, after the clean-energy carmaker said it delivered 499,550 vehicles last year, a record level that fell just shy of Elon Musk’s 500,000 target.  

Contracts linked to the S&P 500 are priced for a 24 point gain while those linked to the Nasdaq Composite suggest a 70 point bump for the tech-focused benchmark.

Overnight gains for both the Chinse yuan and the Japanese yen added to U.S. dollar weakness, as did a stronger-than-expected reading for German manufacturing activity over the month of December, pushing the dollar index 0.53% lower to a fresh two-and-a-half year low of 89.460 against a basket of its global peers.

The dollar’s slump, which extends its first annual decline since 2017, helped boost global oil prices, as did comments from OPEC Secretary General Mohammad Barkindo, who said the outlook for crude demand over the first half of this year is “very mixed”, indicating the cartel will maintain is current levels of production. 

U.S. crude futures for February delivery gained 36 cents in early European trading to change hands at $48.88 per barrel, while Brent contracts for March rose 61 cents to $52.41 per barrel.

European stocks got off to a solid start, as well, with Germany’s trade-sensitive DAX performance index rising 1.3% and trading within just a few points of its all-time high. Britain’s FTSE 100 jumped 2.9% in London on the first full trading day following its late-year Brexit deal, even as the pound traded at a multi-year high of 1.3678 against the greenback. 

Overnight in Asia, the firmer yen held back gains for the Nikkei 225 in Tokyo, as did reports of a pending lockdown in the Japanese capital amid a worrying increase in new coronavirus infections. 

The Nikkei close 0.68% lower at 27,258.38 points while better-than-expected PMI readings from China helped the region-side MSCI ex-Japan index rise 1.35% to a fresh record high of 671.47 points.