Yahoo Finance Wider rally in European markets as Boris Johnson heads to Brussels and US stimulus hopes grow
European markets had a positive open and rallied overall on Wednesday ahead of UK prime minister Boris Johnson heading to Brussels, where he is scheduled to have dinner with European Commission president Ursula Von Der Leyen. Markets also remain optimistic as US lawmakers continue negotiating a new stimulus deal to shore up the economy badly hit by the COVID-19 pandemic.
The FTSE (^FTSE) was gaining since early trading and closed up 0.3% in London. The DAX (^GDAXI) was higher 0.6% in Frankfurt, while the CAC 40 (^FCHI) in Paris fell slightly 0.1%.
US markets had a modest open, with the S&P (^GSPC) down 0.2%. The Dow Jones (^DJI) also fell 0.2% and the Nasdaq (^IXIC) slid 0.4%.
The UK and Canada signed a post-Brexit trade agreement, through which an estimated “£42m ($56m) tariff burden on UK exports has been saved,” the UK government said on Wednesday.
The other most significant advancement in Brexit talks came on Tuesday, as the UK announced it would be withdrawing the most contentious provisions from its Internal Markets Bill that would enable the government to break any agreement with the European Union.
Wednesday’s meeting between Johnson and Von der Leyen will hopefully “push back against the more hawkish voices amongst some in the EU who mistakenly think that somehow a no deal outcome is even an option to be contemplated,” said Michael Hewson, chief market analyst at CMC Markets UK.
He added that “What is required in the next few hours is less pig headedness and more pragmatism on the part of all parties. There will be no winners from a no deal outcome, whatever either side might tell you. If anything a no deal would be a kind of mutually assured destruction.”
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In the US, progress continues on achieving a stimulus deal. Late on Tuesday, US Treasury secretary Steven Mnuchin presented a $916bn (£672.33bn) bill to House speaker Nancy Pelosi. The bill was jointly brokered by the White House and Republican Senate majority leader Mitch McConnell. The proposal comes weeks before US president Donald Trump is set to hand over power to president-elect Joe Biden.
In a joint statement, Pelosi and Senate minority leader Chuck Schumer said “"Bipartisan talks are the best hope for a bipartisan solution” but "the President's proposal starts by cutting the unemployment insurance proposal being discussed by bipartisan Members of the House and Senate from $180bn to $40bn," which the officials said "is unacceptable."
Meanwhile, COVID-19 cases continue to rise in the US at an alarming rate with the country reporting more than 200,000 cases in the past 24 hours. In Europe, Switzerland is tightening measures as case numbers rise there, including reducing opening hours for shops and restaurants. France’s health minister also said the country could introduce a new curfew if case numbers don’t go down.
Japan’s Nikkei (^N225) closed higher 1.3%, the Hong Kong Hang Seng (^HSI) was up 0.8%, and China’s Shanghai Composite (000001.SS) fell 1.1%. South Korea’s KOSPI (^KS11) gained by 2%.
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