Morning Minutes 12/10/2020

Morning Minutes

New ECB Stimulus and IPO Trading Debuts In Focus Today

December 10, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Major indices are holding steady again as investors digest a flurry of headlines coming in across a number of fronts.

The European Central Bank announced this morning that it is increasing its asset purchase program by another €500B in a bid to offset weakness coming from the latest round of lockdowns in Europe. The ECB may also be trying to offset any disruptions should EU-UK trade talks fail to reach an agreement by Monday’s deadline. The British Pound is selling off again today, falling 0.75% against the US Dollar while the Euro is up 0.2%. The FTSE is up 0.4% on the currency effect, while the Dax is down 0.2%.

In the US, IPOs have partying like its 1999 again this week. Yesterday after pricing its IPO at $102.00, above the projected $90.00 to $95.00 range, DoorDash shares soared on their opening trading day to close at 189.51. Today, AirBnB is set to make its trading debut after pricing its $47B Initial Public Offering at $68.00, above the $56.00-$60.00 range which had been projected by the company.

There’s a lot happening on the political and vaccine fronts this week as well. In Canada, while lockdowns continue to deepen, Health Canada approved Pfizer’s vaccine yesterday, with first administrations expected to start next week, and the Bank of Canada maintained is current monetary stimulus program.

In the US, the FDA is widely expected to approve Pfizer’s vaccine today, and politicians in the House of Representatives have agreed on a short-term funding measure to put off a government shutdown for a week while they continue to negotiate a larger fiscal spending and support package. Several states have joined Texas in its legal challenge to the election results from four battleground states ahead of next week’s Electoral College vote.

US jobless claims came in worse than expected this week both in terms of initial claims (853K vs street 725K) and continuing claims (5.75M vs street 5.33M) suggesting that new lockdowns may be starting to take their toll on employment.

In this mixed news environment, US index futures are flat to down 0.5%. Commodities, however, are up this morning with WTI and Brent Crude Oil both gaining about 0.5% and copper climbing 0.2%. Gold is up 0.2% while Silver is up 0.6%.

 

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