1. European Stocks Bounce Back as Dollar Advances
Stocks rebounded in Europe after their biggest drop in almost two months as Brexit talks continued and the U.S. Senate passed a coronavirus relief bill. The Stoxx 600 Index climbed as cyclicals staged a comeback following an outbreak of a new strain of the virus and a slew of lockdowns and travel curbs to contain it. Banks and retailers led gains. An 11th-hour proposal by U.K. Prime Minister Boris Johnson to secure a free-trade deal with the European Union was rejected, two officials said, deepening the slump in the pound. The island nation looks increasingly isolated with key transport links frozen to curb the spread of the variant virus taking hold in the U.K.
Futures on the S&P 500 Index climbed 0.2% as of early morning New York time.
The Stoxx Europe 600 Index jumped 0.8%.
The MSCI Asia Pacific Index decreased 0.9%.
The MSCI Emerging Market Index dipped 0.4%.
2. Massive Package of Virus Relief, Federal Funding Passes Congress
Congress passed a $2.3 trillion bill, the second-biggest economic rescue package in U.S. history as part of a massive year-end spending bill, concluding months of discord between Democrats and Republicans over how to address the pandemic that continues to surge across the country. In addition to funding government operations for the rest of the fiscal year, the legislation will provide aid for small businesses, supplemental unemployment benefits and $600 stimulus payments to most Americans and their children starting as soon as next week. It also includes money for schools, airlines and for distribution of vaccines.
3. S&P 500 Slumps Monday on Virus Angst After European Rout
U.S. stocks slumped, joining a global decline as a new variant of the coronavirus in the U.K. and a wave of lockdowns and travel restrictions damped spirits. The S&P 500 Index dipped about 0.4%, dragged lower by losses for Tesla, which fell more than 6% on its first day after being added to the U.S. benchmark. The weakness in U.S. markets was minor compared to the rout seen in Europe, where the Stoxx 600 Index slumped the most since October as Italy, the Netherlands, Belgium and France closed their borders to the U.K. Travel and leisure stocks were hard hit.
4. BioNTech CEO Confident Vaccine Will Work on U.K. Covid-19 Variant
German pharmaceutical company BioNTech is confident that its coronavirus vaccine works against the new UK variant, but further studies are needed to be completely sure, its chief executive said Tuesday. The variant, detected mainly in London and the southeast of England in recent weeks, has sparked concern worldwide because of signs that it may spread more easily. While there is no indication it causes more serious illness, numerous countries in Europe and beyond have restricted travel from the UK as a result. CEO Ugur Sahin told a news conference the day after the vaccine was approved for use in the European Union that the immune response by this vaccine scientifically also can deal with the new virus variants.”
5. Airbus Warns of $5 Billion in Lost Orders on AirAsia X Debt Plan
European plane-maker Airbus SE believes it may lose more than $5 billion of aircraft orders under struggling airline AirAsia X’s restructuring plans. Airbus Asia Pacific President Anand Stanley said in the court filing there’s a “strong possibility that Airbus will suffer substantial losses and prejudice” under the proposed restructuring plan for the Malaysian long-haul budget carrier. Airbus has already built or substantially built seven A330neos for AirAsia X and there are a further 71 of the wide-bodies on order, according to the filing. AirAsia X has also failed to pay $301.2 million in pre-delivery payments for its A330neo orders plus $2.5 million on A321XLR narrow-body jets.
6. U.K. Deficit Hits $323 Billion With Economy Facing Recession
U.K. government borrowing climbed to a record $323 billion in the first eight months of the fiscal year, reflecting the damage inflicted on an economy now at risk of falling back into recession. In November alone, spending exceeded tax revenue amid the escalating cost of supporting firms and households through the pandemic. It leaves Britain facing its largest ever peacetime budget deficit. Separate figures confirmed the economy rebounded strongly in the third quarter. But a contraction is expected this quarter, and hopes of recovery early next year are fading after the government tightened restrictions to combat a mutated coronavirus and several European countries banned entry from Britain.
7. EU Rebuffs Boris Johnson’s Latest Brexit Concession on Fish
The European Union rebuffed Prime Minister Boris Johnson’s latest concessions on fishing rights, dealing a setback to efforts to secure a post-Brexit trade deal. Johnson spoke with Commission President Ursula von der Leyen twice by phone on Monday to try and break the deadlocked negotiations. The U.K. made an offer that would see the value of the fish EU boats catch in British waters shrink by 30%, a substantially smaller drop than the 60% it was demanding last week. The bloc, however, refused to accept a reduction of more than 25%, saying even that was hard for countries like France and Denmark to accept.
8. Oil’s Slump Deepens as New Virus Strain Threatens Fuel Demand
Oil extended this week’s slump on fears that rising virus infections and a faster-spreading strain will inflict a new blow on fuel consumption. Futures are down more than 3% in New York since Friday’s close. Many countries have suspended travel with the U.K., where a new Covid-19 variant is forcing more than 1.6 crore people to stay at home. A resurgence of the virus gathered pace in Asia, with Taiwan recording its first locally transmitted infection since April and a cluster of cases swelling in Sydney.
9. Hang Seng Proposes Major Overhaul of Hong Kong Stock Index
Hang Seng Indexes is considering wide-ranging changes to Hong Kong’s stock benchmark that would dilute the influence of its largest companies. The five proposals include maintaining “a certain number of constituents classified as Hong Kong companies,” according to a 16-page consultation paper released Tuesday. Hang Seng is also considering increasing the number of companies to between 65 and 80, as well as capping weightings at 8% and fast-tracking new listings. The index currently has 52 members with weights limited to 10%. The sweeping proposal comes amid significant changes within the city’s stock market, as a wave of Chinese mega-caps chooses the financial hub as a preferred venue to sell shares.
10. World’s Longest Virus-Free Streak Ends With New Taiwan Case
The first locally transmitted case of Covid-19 in more than eight months was reported in Taiwan, ending what was the world’s longest stretch without a domestic infection and providing a reminder of the virus’s ability to outfox even the most successful efforts to contain it. A 30-year-old woman was confirmed to have caught Covid-19 in Taiwan, Health Minister Chen Shih-chung said at a briefing in Taipei Tuesday. While it has seen cases in travellers arriving from outside, Taiwan’s last infection within the community was April 12. The woman came into repeated contact between Dec. 7 and Dec. 12 with a pilot from New Zealand who had caught Covid-19 in the U.S. before travelling to Taiwan, according to Chen.
