November 9, 2020

Stock Futures Like President-Elect Joe Biden

Stock Futures Like President-Elect Joe Biden

Looking at the U.S. and European futures, one thing is pretty clear, and that is that traders are very pleased with the president-elect, Joe Biden. For them, this means less uncertainty, less turmoil in terms of foreign relations, and reversal of some futile policies which were set by the Trump administration.

There are rumours that Germany is considering delaying a $4 billion tariff strike on the U.S., which is over illegal subsidies provided to Boeing and their rival airlines in a tit-for-tat trade battle. The foreign minister of the country is seeking a new relationship with the president-elect, Joe Biden. 

All of this comes at a time when President Trump has refused to accept the election results or concede the loss in the U.S. presidential election.

On the other hand, Joe Biden is wasting no time putting the team together for the most important task on hand and fighting the pandemic, which is getting out of control once again. The daily cases of coronavirus in the U.S. are once again through the roof, and the fear is that the rise in coronavirus cases can easily lead to another national lockdown. So far, another lockdown or even regional lockdown scenarios are not priced into the current prices. 

What is priced in the market is that Joe Biden will do whatever it takes to bring the coronavirus cases down, and his judgment is mostly going to rely on science. It is also expected that Biden, with his background, will soon be able to negotiate another relief package with Democrats and Republicans in Congress. There is no doubt that the U.S. economy desperately needs more fiscal stimulus, and the chairman of the Federal Reserve, Jerome Powell, has already mentioned this several times. 

Chinese Data 

Elsewhere, the Chinese economic data released over the weekend confirmed that the country’s economic recovery is still very much on track. China, the second-biggest economy in the world, has much better control of the coronavirus situation, and this has set a trend of better than expected economic numbers. The Chinese trade data confirmed a better than expected reading, which is also fueling the rally for the European futures. 

Brexit 

In terms of Brexit, the trade deal talks continue in London with both sides, the U.K. and the E.U. They are trying to clear most of the sticking points. The sterling is trading higher against the dollar today, but that is chiefly due to the dollar index‘s weakness. The Sterling-dollar pair has crossed the level of 1.30, currently trading at 1.31 and any improvement in the Brexit negotiations is likely to positively influence the currency. After all, the major event which is holding the currency lower is Brexit. 

 Commodities 

Oil prices continue their rebound today. The crude oil and Brent prices are off their lows, which we saw last week, and traders are hoping that with a Biden presidency, the current coronavirus situation will come to an end. Moreover, traders and investors will be looking closely at the ADIPEC conference, where all the heavy hitters like Saudi Arabia and Russia will be contributing. 

The hope is to see the consistent message of keeping the oil supply under control and not getting involved in any price war. For oil traders, the critical price level is still the $40 mark, and only a break above this price level will open the door for further improvement.