European stock futures are set to open mixed today. This confirms that investors are still not convinced that we are out of the woods yet. The road to recovery is long, and it is still full of obstacles. The only difference is that this time we are familiar with these obstacles and hence better equipped to deal with them. Everyone wants to see the much faster rollout of coronavirus vaccines, but challenges with respect to these vaccines’ logistics were very much known even before they were available.
Germany extended its lockdown restrictions yesterday, which is sitting on traders’ dashboard today as a warning sign about economic growth. However, we should be looking at the positive side of things: these new restrictive measures introduced by Germany are for much less time than previously anticipated.
U.S. stock futures are also failing to pick up any positive gains from yesterday’s price action. Markets climbed yesterday, and traders pushed the major stock indices away from their last week’s low. The Dow Jones Industrial Average closed with a gain of 116.26 points or 0.4%, the S&P 500 jumped 0.8%, and the move was chiefly driven by communication and energy sectors. The tech-savvy index, the Nasdaq Composite, surged 1.5%.
Janet Yellen, the U.S. upcoming Treasury Secretary, made it clear once again that she is serious about spending “big”, and she is also aware of the country’s debt situation. Listening to her comments yesterday, it was clear that the U.S. enterprises may face higher corporate tax rates in the future, and that will be the cost of going big now–in terms of fiscal spending.
Another important message from the Treasury Secretary was that the Biden administration’s policy towards China is unlikely to change its course of action. Although tone and approach may differ somewhat.
Finally, Yellen also made it clear that she has no interest in making the dollar weaker in order to gain any competitive advantage. This particular factor is very different as compared to the previous administration’s policies.
Investors will also be looking at Biden’s inauguration ceremony, which is taking place today. Joe Biden will become the 46th President of the United States of America. From a trading perspective, investors would like to hear a confirmation of his $1.9 trillion fiscal plan and what policies he will reverse from the Trump era. Another factor that could also fuel some volatility in the market is if the transition of power isn’t smooth, meaning if we see chaos in the country–just like the one we saw in Washington a few weeks ago.
One thing is for certain; when we look at America today, the country is more divided now than it was under Obama’s administration. President Trump has done far more damage to Trump’s famous slogan “Make American Great Again” and made the U.S. position much weaker on the global stage, and it is going to take a long time again to change the direction of the ship once again.
In terms of stock news, Netflix confirmed in its earnings report last night that the company recorded a bumper year in terms of new subscribers. Netflix added more subscribers during the first half of last year than the whole of 2019. The subscriber numbers’ for Q3 and Q4 made the company post a record year for the Q4 earnings report, Netflix posted revenue of $6.64bn and new subscribers of 8.51 million. The company beat estimates on both matrices. The stock rose sharply in aftermarket hours, and it is likely to face higher volatility today as well.