European and U.S. stock futures are struggling for direction today. There is no doubt that the bulls have run out of steam, and this is despite the fact that the U.S. stock market is making small moves to the upside. However, the important thing to note is that the current stock moves aren’t as big as they were. In other words, this shows that major believers aren’t heavily backing the current upward move. Stock traders are of the mind frame that the path of least resistance for the U.S. stock indices is skewed to the downside. So far, the Dow Jones and the S&P 500 indices have gone too far and too fast. A correction is firmly on the cards. Investors are hoping for at least a 5% correction, bringing the prices closer to their mean. More importantly, the RSI for these indices will move away from overbought areas.
Investors are hoping to hear more from President-elect Joe Biden about his stimulus plan. He has made the markets believe that the new stimulus package will not be in the billions but in the trillions. One aspect of the bill that is likely to be the most challenging is a higher direct payment of stimulus cheques. This aspect of the stimulus bill is expected to struggle. Something that will be easily passed, and may favour the whole stimulus bill is that we need more money for vaccination. Biden’s stimulus aid package for the U.S. economy is likely to contain big amounts . President-elect is scheduled to deliver the speech today on the stimulus plan, and market players are going to remain highly sensitive. The chances of disappointments are greater as the U.S. stock market has been holding on to its gains chiefly because of the bigger stimulus package’s hopes.
Asian stocks have also struggled for direction today, and this is despite the fact that we had much better than expected economic numbers out of China. The Chinese export number surged 18.1% in December in comparison to a year earlier data. The actual number also came ahead of the forecast of 15%. We also saw improvement in the import numbers, which grew 6.5% year-on-year in December and came out much better than the forecast of 5%.
In terms of coronavirus and vaccine, investors are feeling a little more optimistic as the research data confirms that J&J’s one-shot vaccine seems to have produced antibodies in young and old people. This certainly makes the process a lot easier in terms of logistics, as we all know that the current two-shot vaccines by Moderna and Pfizer have made the logistic side of things a lot trickier. Countries like the U.S., the U.K., and Europe are trying their best to get people vaccinated as soon as possible, but it is very clear that it will be mid-February before the most vulnerable group of people will get a vaccine. Only after that, the process will begin for the rest of the population, and this means that there are chances that the variant of coronavirus will continue to dampen the global economic growth outlook.
The political drama continues in Washington, as Donald Trump becomes the first president who could be impeached twice. The House impeached him yesterday for inciting the attack on Capitol Hill last week. The chaos and civil unrest resulted in the deaths of at least five people. The House is likely to pass the bill to Senate; however, the chances are that we may not get the answer for this because there isn’t enough time left as the presidential inauguration ceremony takes place on January 20th. The impeachment in the House has made Trump’s political career in his own party even weaker as ten House Republicans voted to impeach Trump