European Stocks Open Higher, US Equity Futures Mixed

06 Jan 2021 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • European stocks trade up during Wednesday’s trading session
  • Lockdowns and restrictions characterize the current situation in Europe
  • Cases continue to increase in the UK

European Stocks Open higher

European stocks are modestly higher in Wednesday’s trading session as the IBEX35 takes the lead with about 1.00% gains as the session kicks off. FTSE100 is right after, up about 0.90% while the German DAX and the French CAC40 are hovering higher by 0.45%.

Europe is predominantly focused on battling the coronavirus pandemic that is sweeping across the continent. More and more European countries are introducing new lockdown measures in an attempt to tackle the spread of Covid as well as the new variant that can spread at a quicker pace. After the UK announced that the country was going into its third nationwide lockdown, Germany’s Chancellor Angela Merkel extended the current lockdown until the end of January and also prohibited non-essential travel in the areas that are hit the hardest by the pandemic.

On Tuesday, Chancellor Merkel urged citizens to “reduce their contacts to an absolute minimum” as the recent upsurge in virus infections is creating a substantial strain on hospitals. Germany reported over 21,000 new coronavirus cases for Jan 5, bringing the 7-day average rate to 17,352 cases. Germany, along with other European countries, is racing to administer as many vaccines as possible amid growing pressure that EU governments are sluggish in their approach to vaccination. So far, the rate of vaccination in the EU is lagging behind those of the UK and the US. Germany has administered about 265,000 doses out of a total of 1.3m vaccines received.

A Eurozone Recession Ahead of Us?

The UK’s Prime Minister, Boris Johnson expressed confidence in the vaccination plan introduced yesterday which sees 2 million shots administered per week by Feb 15 or a total of almost 14m vaccinated by then. Nadim Zahawi, the UK minister in charge of Covid-19 vaccinations has dubbed the plan “achievable”, despite the “very stretching target”. The UK registered a spike in recent infections, setting a record as more than 1 in 50 people has Covid-19 in England and 1 in 30 people in London. The nation steps up its vaccination drive as the number of cases is rising amid the concerns around the distribution of the vaccine.

The latest lockdowns across Europe present a real challenge for citizens to spend or make money as a large part of the economy is being shut down. If unemployment is not held in check, the Eurozone risks a recession in the first quarter of 2021.

Across the Atlantic, the US stock-market futures point to a mixed open as the Georgia run-off elections predict a Democratic win in the contest. Dow Jones futures indicate a relatively flat open, while S&P futures point to a negative open by roughly 0.50%. Nasdaq futures are also in the negative, pointing to a lower open by almost 2.00%.

One of the races already has a winner, the Democratic candidate Raphael Warnock was declared the victor in the race against Republican rival Kelly Loeffler. The other Georgia Senate race is showing a lead for Democratic challenger Jon Ossoff against Republican Sen. David Perdue. If the Democrats win the two key seats in the Senate, this will give Joe Biden’s party control of the upper chamber, thus making it possible

for the President-elect to implement his policies, which stand for higher corporate taxes and more regulations for businesses along with trillions of dollars in financial aid for the US economy.

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