Daily Market Commentary December 4th 2020

US Markets rallied back to previous record highs, with the Dow once again breaking the 30,000, as vaccine confidence rises. The post-election political activity is coming in the form Congressional action over a fiscal stimulus/bailout bill, but a few surprises await. Democrats have decided to act in the House, proposing a $900+ Billion package, although Senate leader McConnell is looking at around $500 Billion. President Trump has indicated he will sign. US Weekly Jobless claims were lower than expected, while job cuts were also much lower, according to the Challenger Jobs report.

Contentious Trade negotiations between the EU and UK continue, with a post-Brexit deal likely, although details are thin. The decline in the US Dollar has allowed the EUR to jump to 1.2140, while the GBP soared to 1.3480, boosted by the vaccine approval and a possible trade deal. The declining reserve allowed the commodity currencies to post further gains, with the AUD hitting 0.7450, while the NZD drifted to 0.7075. The NZD has posted big recent gains, but declined against most cross rates, underperforming. Australia is outperforming, after the stronger than expected economic growth numbers, trade data and construction also showed big gains.

Markets sentiment is high, supported by the vaccine distribution prospects, but infection rates remain a risk and threaten economic performance. Europe will hinge on the imminent trade deal, while the US awaits further fiscal stimulus, from a less politically motivated Congress. These remain nervous times, with many political balls in the air, both sides of the Atlantic.