Donald Trump effectively acknowledged defeat in the presidential election, although he continues to tweet defiance. Janet Yellen will be Joe Biden’s Treasury Secretary. Bitcoin and Chinese equities experience a speculative surge, while stocks are set to gain on confidence in the outlook for 2021. U.S. oil industry data on inventories are due and the U.K.’s lockdown will end on December 2. Here’s what you need to know in financial markets on Tuesday, November 24th.
1. Trump concedes, sorta; Yellen tapped
President Donald Trump implicitly acknowledged electoral defeat, authorizing his staff to allow President-elect Joe Biden the resources needed by his transition team. He continued to say via Twitter that he doesn’t accept the outcome of the election, which was effectively sealed on Monday when the state of Michigan certified its results.
Biden’s future administration team is taking shape. He has tapped former Federal Reserve chair Janet Yellen to be Treasury Secretary. If confirmed, she’ll be the first woman in the position.
Both pieces of news were taken positively by global markets, which welcomed both the clarity around the election and the prospect of an expansive fiscal policy from the liberal-minded Yellen.
2. Bitcoin, Chinese equities surge on speculative wave
The price of Bitcoin went above $19,000 for the first time in three years, expectations of a weak dollar and easy global monetary policy stoked speculation in the world’s favorite alternative asset.
Bitcoin has now risen by over 240% from its low in March, and by 67% in the last six weeks alone, helped by the gradual increase in regulated products giving exposure to the asset, and by the decision of Paypal to offer wallets denominated in the digital currency, lending the clout of a globally-recognized brand in global payments.
It’s not the only asset seeing high speculative flows, however. Chinese equities are also seeing their highest interest from retail investors since the 2015 equity bubble there. Given the enthusiasm among Chinese retail investors for Bitcoin, it’s not impossible that the two developments are two sides of the same coin. Demand for alternative assets in China is being helped by a wave of defaults in the local bond market that has eroded trust in more traditional investment vehicles.
3. Stocks set to open higher as earnings pick up again; CB consumer sentiment eyed
U.S. stock markets are set to open markedly higher for a second day as confidence in the outlook for 2021 rises, thanks to the increasing number of vaccines reaching the approval stage and to the prospects of a stimulative fiscal policy next year. That may or may not find an echo in the Conference Board’s consumer confidence index, due out at 10 AM ET.
By 6:30 AM ET (1130 GMT), Dow futures were up 313 points, or 1.1%, on course to test the 30,000 barrier when official trading starts.
S&P 500 futures were up 0.8% while NASDAQ Futures were again underperforming with a gain of only 0.4%, as investors continued to rotate back into value and cyclical stocks.
After something of a lull, earnings season gets back into gear with reports from Medtronic (NYSE:MDT), Best Buy, Dollar Tree (NASDAQ:DLTR), Analog Devices (NASDAQ:ADI), Tiffany’s and others.
4. U.K. to end England lockdown
The U.K. lifted the national lockdown order governing England from December 2, but Prime Minister Boris Johnson said a sliding scale of restrictions on business and social activity is likely to remain in place through March next year. Many businesses, especially in the hospitality sector, will find themselves subject to tighter restrictions on operations than before as a result.
Sterling rose on the news to test a two-month high but was held back by a warning from Bank of England Governor Andrew Bailey that a messy post-Brexit transition at the end of December would be ‘worse than Covid.’
On the continent, markets were lifted by an upward revision to German GDP growth for the third quarter to 8.5%, from an initially reported 8.2%. However, the more timely Ifo business climate index and the French Insee business confidence index for November both fell, albeit by less than expected.
5. Oil hits eight-month high on 2021 optimism; API due
Crude oil prices hit an eight-month high as confidence in the demand outlook for 2021 strengthened.
By 6:30 AM ET, Brent futures were up 1.0% at $46.50 a barrel, while U.S. crude futures were up 1.2% at $43.58 a barrel.
In the absence of major news from the big global producers, the focus Tuesday will likely be on American Petroleum Institute inventory data for last week. The market is reckoning with a draw of 333,000 barrels in crude stocks ahead of the Thanksgiving Holiday, where mobility may suffer from a reluctance to travel due to the pandemic.