Major US stock index futures extended upside rally cheering the prospects of Democrats controlling the Congress with its both chambers, despite riots at the Capitol Hill. Investors are anticipating further spending from Democrats, which would boost the economic recovery, and drive growth significantly higher. However, a key downside would remain with their approach with corporate taxes. The Dow Jones Industrial Average futures rose to a record high of 31051, the S&P500 futures advanced to 3772, while Nasdaq underperformed, trading at 12700.
The dollar index, which measures the greenback against a basket of major currencies, rebounded to 89.55, after falling to its lowest levels since April 2018. The rally in US treasury yields supported the dollar, as 10-year yields raced higher to 1.061%, the highest since the beginning of the pandemic. The EURUSD weakened to $1.2310, and the GBPUSD held steady near $1.3590. The minutes of the last Federal Reserve Monetary Policy meeting showed that the committee could consider future adjustments to the asset purchases program.
Precious metals prices came under pressure as the US Treasury yields rebounded sharply. The rising yields added the opportunity cost of holding a non-yielding asset. However, gold is gaining support from the prospects of further spending with democratic congress. The price of a gold ounce currently is trading near $1917, falling from an interim top of $1926, the price of a silver ounce declined to $27.05, and palladium futures held steady near $2450.
Oil prices extended upside rally supported by Saudi voluntary output cuts and falling US inventories. Saudi surprised other producers on Tuesday by announcing voluntary output cuts of 1 million barrels per day in February and March to boost market stability. Meanwhile, the US Energy Information Administration reported a decline of 8.010 million barrels in US crude inventories. The West Texas Intermediate February delivery rose to $51.25, and Brent blend March delivery advanced to $54.88.
Major Economic Events
|9:30||UK||Construction PMI (Dec)||55.0||54.7|
|10:00||EZ||CPI (YoY) (Dec)||-0.2%||-0.3%|
|10:00||EZ||Retail Sales (MoM) (Nov)||-3.6%||1.5%|
|12:30||EZ||ECB Monetary Policy Statement||-||-|
|13:30||US||Initial Jobless Claims||833||787|
|15:00||US||ISM Non-Manufacturing PMI (Dec)||54.6||55.9|