On Wall Street, the Dow Jones and tech-heavy Nasdaq have surged to fresh record highs after the stronger-than-expected ISM service sector survey. The Dow rose through the 31,000 mark to 31,081, a gain of 0.8%, and the Nasdaq climbed 2.1% to 13,009.
Investors around the world were cheered by confirmation that Democrats have taken control of the US Senate after two crucial wins in elections in Georgia. This prompted the US investment bank Goldman Sachs to upgrade its US growth forecasts, on the assumption of a bigger US stimulus package.
Calm returned on Capitol Hill and Joe Biden’s election as the next US president was certified hours after hundreds of Donald Trump supporters stormed the Capitol.
In London, the FTSE 100 index has turned positive again, trading 0.19% higher at 6,854. Germany’s Dax is up 0.71%, France’s CAC is 0.83% ahead and Italy’s FTSE MiB has gained 0.27%.
The UK construction sector enjoyed a rebound at the end of 2020, boosted by a sharp rise in housebuilding, according to an IHS Markit/CIPS survey, while in the eurozone, construction activity declined for a 10th month.
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Andrew Hunter, senior US economist at Capital Economics, is somewhat sceptical, saying the unexpected rebound in the ISM services index in December is hard to square with other evidence that shows the second wave of virus cases adn restrictions is starting to weigh more heavily on the economy, particularly services.
Like the manufacturing survey released earlier this week, the headline services reading received an artificial boost from a jump in the supplier deliveries component, which reflects virus-related disruption rather than stronger demand.
The employment index, which fell to 48.2 from 51.5, was the only one to suggest the virus is taking its toll, and lends some support to our forecast that the employment report due tomorrow will show non-farm payrolls falling by 100,000 in December.
While both of last month’s ISM surveys have been much better than expected, we already know that real consumption fell in November and the latest high-frequency data point to a further decline in December. The recent fiscal stimulus, with the promise of more to come following the Democrats’ Senate victories, should help drive a rapid economic recovery from the middle of this year once the vaccine rollout reaches critical mass. But with the current spread of the virus showing few signs of slowing, the economy still looks set for a bumpy few months in the meantime.
US stocks have extended gains, driving the Dow Jones and the tech-heavy Nasdaq to fresh record highs, after the stronger-than-expected non-manufacturing survey from the Institute of Supply Management.
It showed activity in the US service sector picked up in December, with the main reading rising to 57.2 from 55.9, better than expected.
Wall Street has just opened, and US stocks are up!
- Dow Jones up 133 points, or 0.43%, at 30,962
- S&P 500 up 26 points, or 0.7%, at 3,774
- Nasdaq up 130 points, or 1%, at 12,871
Wall Street is expected to open higher as markets are hopeful that a Democrat-controlled Senate will pass more economic stimulus measures. US Congress certified Joe Biden’s election victory, hours after hundreds of Donald Trump’s supporters stormed the Capitol and halted the process.
Dow Jones futures are up 117 points, or 0.38%, while S&P futures are 21.5 points ahead, a 0.57% gain, and Nasdaq futures rose 104.5 points, or 0.83%.
In London, the FTSE 100 index has lost some 31 points or 0.46% to 6,8120 amid profit-taking on banking stocks. Germany’s Dax is 0.38% ahead while France’s CAC has gained 0.41% and Italy’s FTSE MiB is flat.
Separate US trade data show the country’s trade deficit rose more than expected to $68.1bn in November from $63.1bn in October. The deficit with China was little changed at $30.68bn.
The number of Americans filing first-time claims for jobless benefits unexpectedly fell last week – but stayed very high as the coronavirus pandemic rages on. Initial claims for state unemployment benefits were 787,000 in the week to 2 January compared to 790,000 the previous week, the Labor Department said. Economists had forecast 800,000 applications in the latest week.
The figures come ahead of the closely watched non-farm payrolls data on Friday. Wall Street economists are forecasting the creation of 71,000 jobs (compared with 245,000 in November), which would be the smallest increase since the jobs recovery started in May, and mean the economy recouped 12.m of the 22.2m jobs lost in March and April.
Covid-19 cases in the US have risen to more than 21 million, and the death toll exceeds 352,000, according to the US Centers for Disease Control and Prevention.
National Express is to suspend its entire network of coach services across the UK from Monday due to the latest Covid-19 travel restrictions, writes the Guardian’s transport correspondent Gwyn Topham.
The company, a major provider of timetabled coach routes, said it would be halting all services until March.
Chris Hardy, managing director of National Express UK Coach, said:
We have been providing an important service for essential travel needs. However, with tighter restrictions and passenger numbers falling, it is no longer appropriate to do this.
All journeys until Sunday night will run as planned to ensure that no passengers making essential journeys are stranded, National Express said, while customers whose travel has been cancelled will be contacted for free rebooking or full refunds.
And here is our full Ryanair story:
On the vaccine front: the rollout of coronavirus vaccines in Britain is being limited by the supply of jabs. The UK government it is working with the drugmakers Pfizer and AstraZeneca to increase supplies of their coronavirus vaccines, the health secretary Matt Hancock has said. He told broadcasters:
The rate limiting step is the supply of vaccine, and we’re working with the companies, both Pfizer and of course AstraZeneca, to increase the supply.
The manufacturers are doing a brilliant job, and they’re delivering to the schedule that’s agreed, but that schedule is the amount of vaccine that we have… we expect to see that amount of vaccine being delivered going up.
His comments came as doctor’s surgeries started administering the vaccine developed by Oxford University and AstraZeneca, as part of a herculean effort to vaccinate the most vulnerable within six weeks. More than 1.3m people in the UK have received one shot of the Pfizer/BioNTech or the AstraZeneca/Oxford University so far. They require two doses.
The government must ramp up its vaccination programme to 2m a week to hit its target.