Stocks roar on stimulus bets as Nasdaq jumps 2.5%

Stocks rallied a day after violence rocked the US Capitol, with investors firmly focused on the prospect for more stimulus and the likelihood that calm will prevail as Joe Biden takes the presidency. The S&P 500 rose by 1.48% to 3,803.79 while Dow Jones was up 211.73 points (0.69%) to 31,041.13.

Harker says Fed may begin paring bond purchases in late 2021

The US central bank may begin paring back its bond-buying program as soon as the end of this year, Federal Reserve Bank of Philadelphia President Patrick Harker said. “I could see, potentially, that occurring at the very end of 2021 or early 2022. But it is all going to depend on the course of the economy, which will depend on the course of the virus,” Harker said.

US initial jobless claims remain elevated heading into 2021

Applications for US state unemployment benefits were little changed at elevated levels in the final week of 2020, indicating the labor market remains battered with the pandemic dragging on. Initial jobless claims in regular state programs fell by 3,000 to 787,000 in the week ended Jan. 2, Labor Department data showed. On an unadjusted basis, the figure rose by 77,400.

US trade gap widened to second-biggest on record in November

The US trade deficit widened to the second-largest on record in November as merchandise imports reached a more than one-year high in the midst of the holiday shopping season, causing the shortfall in goods to climb to the highest yet. The gap in trade of goods and services expanded to US$68.1bn in November from US$63.1bn in October, according to Commerce Department data released.

Euro-area economic confidence rises despite new virus curbs

Economic confidence in the euro area picked up in December, with manufacturers in particular showing resilience against a resurgent pandemic that’s triggered tougher restrictions across the region. A European Commission sentiment index rose by 2.7 points to 90.4 from the previous month, mainly driven by optimism among consumers and in the industrial sector.

Bank of France says high debt puts financial system at risk

Rising corporate debt and the prospect of further Covid-19 lockdowns pose a systemic risk to France’s financial system that may rise in the coming months, according to the country’s central bank. Debts of non-financial companies are now the greatest vulnerability in the system, the Bank of France said in its semi-annual review of financial risks. While the second lockdown starting in November didn’t hit some companies as severely as the first, a slow economic recovery will make it tough for some to pay off debts built up since the start of the crisis.

India’s GDP set to drop 7.7%, biggest contraction since 1952

India’s economy is set for its biggest annual contraction in records going back to 1952 as the rapid spread of coronavirus cases and measures to contain them hurt businesses and households. Gross domestic product will shrink 7.7% in the financial year ending March 2021, the statistics ministry said in its first advance estimate published. That’s steeper than a 7.5% drop forecast by the Reserve Bank of India.

Oil edges higher alongside equities with stimulus hopes growing

Oil gained for a third day as a Democratic sweep in the US stoked optimism around the prospect of more fiscal stimulus under the incoming Joe Biden administration. Brent crude for March settlement rose US$0.08 to US$54.38 per barrel.

Source: Affin Hwang Research - 8 Jan 2021