S&P 500 Slumps on Virus Angst After European Rout

US stocks slumped, joining a global decline as a new variant of the coronavirus in the UK and a wave of lockdowns and travel restrictions damped spirits. The S&P 500 fell by 0.39% to 3,694.92 while Dow Jones was up 37.40 points (0.12%) to 30,216.45.

House Poised to Vote on 5,593-page Relief and Spending Bill

The House was poised to vote on a massive 5,593-page package of legislation that combines pandemic relief with a bill to fund government operations just hours after lawmakers got the text. The roughly $900 billion aid package is attached to a $1.4 trillion measure to fund government operations through the end of the fiscal year. Also included are major tax, energy and national security policy measures.

Businesses Get $100 Billion Tax-write-off Windfall in Aid Bill

Small business owners who got Paycheck Protection Program loans could qualify for big write-offs from their rescue money, amounting to what Treasury Secretary Steven Mnuchin has called a tax-break “double dip.” The Covid-19 relief package set for a vote in Congress would clarify that business owners can deduct expenses paid for with PPP loans, which can be forgiven by the government without incurring a tax.

Italy Needs Deficit to Spur Growth, Gualtieri Tells La Stampa

Italy is set to keep its economic policy expansionary next year to support its coronavirus-battered economy, as agreed with European Union partners, Finance Minister Roberto Gualtieri said. That could require widening the deficit further next year to support economic growth, but that won’t impact a planned reduction after 2021 and will allow Italy to reach its growth targets, he said.

Double-dip Recession Risk Mounts After UK’s Rough Weekend

The UK is on the verge of its second recession in a year with the mutated coronavirus slamming the economy just as Brexit trade talks near their deadline. The surge in infections is now likely to have ramifications into 2021 after a weekend in which the government was forced to tighten restrictions even more, and transport links between Britain and the European Union were temporarily halted because of the virus. The economy is already set to shrink more than 1% this quarter, and the latest pile-on of threats is putting at risk an expected rebound in the first quarter of next year.

Korea’s Exports Gain in Early Trade Data Despite Virus Surge

South Korea’s early trade data showed exports continuing to rise in December despite a raging pandemic, though the pace of gains slowed as some countries placed stricter curbs on activity. Exports edged up 1.2% in the first 20 days of the month from a year earlier, the customs office reported. Average daily shipments increased 4.5% in the period, which had one less business day compared with last year, a slightly slower pace than the 6.3% daily gain in the full November trade figures.

Japan Approves Record US$1 Trillion Budget for Next Year

Japan’s cabinet approved a record budget next fiscal year that tops US$1 trillion and adds to the developed world’s heaviest debt burden as Prime Minister Yoshihide Suga struggles to fight the coronavirus and bolster an economic recovery. Japan’s fiscal 2021 budget calls for 106.6 trillion yen in overall spending during the 12 months starting in April, a 3.8% increase from last year’s initial budget, the finance ministry confirmed.

Oil Slides With New Virus Strain Threatening Global Movements

Crude cratered the most in six weeks as a new strain of the coronavirus in the UK is threatening additional lockdown measures across Europe and reducing global travel routes. Brent crude for February settlement fell US$1.35 to US$50.91 per barrel.

Source: Affin Hwang Research - 22 Dec 2020