1. Stocks, Futures Slump on Virus Curbs; Bonds Rally
Stocks and futures were a sea of red on Monday as a new variant of the coronavirus in the U.K. caused chaos ahead of the Christmas holiday, with regional neighbours suspending travel. Energy and travel shares dragged the Stoxx 600 Index down 2.5% as Italy, the Netherlands, Belgium and France closed their borders to the U.K. The dollar gained the most since June. In the U.S., equity futures pointed to sharp declines at the open even after Congressional leaders reached a deal on spending to support the economy. Losses were concentrated in energy producers and stocks that would benefit from a return to more normal economic activity. The pound slumped by the most since March as an official said “significant differences” remain in Britain’s trade talks with the European Union. Crude oil fell by more than 3%.
Futures on the S&P 500 Index sank 1.8% as of early morning New York time.
The Stoxx Europe 600 Index sank 2.6%.
The MSCI Asia Pacific Index dipped 0.6%.
The MSCI Emerging Market Index dipped 1.1%.
2. Congress Poised for Vote on $900 Billion Pandemic Relief Plan
The House and Senate are set to vote Monday on a roughly $900 billion pandemic relief bill that would be the second-biggest economic rescue measure in the nation’s history. The aid package will be attached to a $1.4 trillion measure to fund government operations through the end of the fiscal year, and congressional leaders said they expect the legislation to easily pass both chambers. The White House said President Donald Trump would sign it. The deal followed more than a week of furious negotiations sparked by a group of Democratic and Republican senators who drew up their own compromise proposal and urged their leaders to act.
3. Tesla Slides in First Day of Trading on the S&P 500 Index
Tesla’s shares fell as much as 6.4% in premarket trading on its first day after being added to the S&P 500 Index, as the broader market slid and the stock retraced gains from Friday when tens of millions of shares were purchased by index-fund managers. Futures contracts on the S&P 500 plunged 2.5%, following European stocks lower after several major countries moved to suspend travel from the U.K. amid concerns about a new strain of Covid-19. Tesla has catapulted 731% this year in anticipation of the historic inclusion, making it the biggest company ever to be added to the benchmark.
4. Biden Will Inherit a Strong Hand Against Xi, Thanks to Trump
Joe Biden will be sworn in as president after Trump’s administration spent years ramping up pressure on China, including levying tariffs on $370 billion in imports, getting Canada to place a Chinese executive for Huawei Technologies Co. under house arrest, threatening access to U.S. capital markets and blaming the Communist Party for the scale of the Covid-19 outbreak. President Trump’s pressure campaign continued last week, as the administration blacklisted more than 60 Chinese companies, limiting their ability to get U.S. technology, in order “to protect national security”.
5. JPMorgan Says Flows to Into Major Crypto Fund Are Key to Bitcoin’s Outlook
The odds of a Bitcoin correction would increase if the flows into the world’s largest traded cryptocurrency fund slow significantly, according to strategists at JPMorgan Chase & Co. The Grayscale Bitcoin Trust’s assets under management have climbed to $13.1 billion from $2 billion at the start of December last year, amid a tripling in the digital currency’s price so far in 2020. Inflows into the fund are running at about $1 billion per month, the strategists wrote in a note Friday. Bitcoin reached an all-time high of $24,291.38 on Sunday. The cryptocurrency’s backers argue it’s gaining ground among longer-term investors as a hedge against dollar weakness and risks such as higher inflation. Others claim an unsustainable speculative fervour, exacerbated by trend-following quant funds, lies behind much of the rally in Bitcoin and other digital assets.
6. Hong Kong May Consider Unprecedented Virus Curbs, Including Curfews
Unprecedented virus control measures including curfews and shutdowns of non-essential businesses may be considered in Hong Kong, according to a government health adviser, as the city continues to see a high number of locally-transmitted cases and the holiday season looms. Limiting the number of people per household allowed to shop for groceries, shuttering all businesses deemed non-essential and shortening mall operating hours are among the curbs that may have to be imposed to prevent another Covid-19 wave.
7. France Halts U.K. Freight Over Virus Alarm, Rocking Supplies
Britain’s biggest port stopped all traffic heading to Europe, triggering delays to food supplies after the discovery of a new variant of the virus prompted a wave of countries to ban travel from the U.K. The escalating crisis prompted Boris Johnson to convene a meeting of the government’s emergency committee on Monday in a bid to keep goods flowing. The concern is focused on links with France, which suspended inbound travel from the U.K., including freight, for 48 hours starting midnight Sunday. The disruption comes at a critical time for Johnson’s government, which is still negotiating the terms of post-Brexit trade with the European Union. It’s also battling a surge in coronavirus infections which forced ministers to put London and much of southeast England into lockdown over the weekend, heaping more misery on businesses in the critical pre-Christmas period.
8. Pound Plummets as Virus Threatens U.K.’s Supply Chains With EU
The pound had its worst day since the coronavirus roiled global markets in March, as a new strain of the pathogen disrupted the U.K.’s supply chains with Europe. Sterling tumbled 2.5% to as low as $1.3188 as Britain’s biggest port in Dover stopped all traffic heading to the continent, and after another Brexit deadline went past without results. The currency’s one-week implied volatility is the highest for a Christmas period in more than a decade. Expectations of monetary easing by the Bank of England mounted, with money markets bringing forward bets for a 10-basis-point interest-rate cut to September, compared with March 2022 on Friday. Ten-year bonds rallied, with yields slipping as much as nine basis points, and the FTSE 100 share index fell as much as 3.3%.
9. Saudi Arabia, Oman Suspend Foreign Travel Over Mutant Virus
Saudi Arabia and Oman halted international flights and closed their borders for a week over fears about the fast-spreading new strain of the coronavirus. State-run Saudi Press Agency said the kingdom may extend the suspension for another week depending on the nature of the virus spread. Oman halted passenger traffic through its air, land and seaports for a week starting Tuesday, but freight services are exempt from the ban. The U.K. has warned that the new virus strain is “out of control,” prompting countries including France and Germany to suspend travel from Britain.
10. Dubai Stocks Fall Most in Seven Months on Travel Worries
Stocks in Dubai slumped the most since May on fears of further travel restrictions after a new variant of the coronavirus was found in the U.K. A travel corridor between Britain and Dubai was expected to help air traffic on the route to climb by a third this month. Any anticipated boost to the city’s struggling tourism sector could also be threatened by several countries including neighbouring Saudi Arabia imposing fresh curbs.