Yazar: Geoffrey Smith
Investing.com – The Democratic Party appears to have regained control of the US Senate by winning both Georgia elections. Technology futures fell heavily on fears of stricter regulation with higher taxes in the Democratic government administration. 10-year Treasury yields exceeded 1% with high borrowing expectations; The ADP employment report will be released and oil is trading at a 10-month high after Saudi Arabia’s action.
Here’s what you need to know in financial markets on Wednesday, January 6th.
1. Both seats seem to be Democrats in the Georgia Senate elections
The Democratic Party is preparing to regain control of the Senate after six years with Republican majority. US TV networks and election prediction services said Raphael Warnock was on his way to oust David Perdue from his seat during the other election Tuesday, while Raphael Warnock defeated the incumbent GOP (Republican Party) Kelly Loeffler.
Warnock’s victory margin was estimated at around 50,000, while Ossoff’s leadership was just under 13,000 in 99% of the votes counted.
If verified, the results will split the Senate 50-50 and allow elected Vice President Kamala Harris to cast a deciding vote. This will mean that the new President, Joe Biden, will make it easier to set up his cabinet and get fiscal policy plans adopted.
2. Stock markets have mixed reaction to Georgia elections
Markets response to Georgia news has been mixed. European and Chinese markets increased with the expectation of a less confrontational trade policy and a broader fiscal policy.
US equity futures were mixed. Investors were caught in the face of the above evaluations, fearing higher taxes and tighter corporate regulation, especially in the technology sector. The Nasdaq fell 2.2%. While it lost 0.4%, it rose 0.2% on the back of more intensive circular and financial stocks, with the expectation of greater incentive spending
The US 10-year Treasury bond yield rose above 1% for the first time since the outbreak of the pandemic last year.
3.ADP employment data, Fed minutes and downward revised PMIs
Apart from politics, the top of Wednesday’s data calendar is the December recruitment figures of ADP.
Net hires in the private sector are expected to have slowed to just 88,000 by the middle of last month. This is the lowest level since the disaster in April, when the rapidly spreading virus forced most states and cities to impose stricter restrictions towards the end of the year.
This trend was also visible in the surveys of European businesses. Eurozone composite Purchasing Managers’ Index was revised from 49.8 points to 49.1 points due to large decreases in the service sector.
The Fed will publish the latest policy minutes.
4.China’s problems grow with mass arrests and bans on payment enforcement
Problems managing relations with China continue to grow exponentially. President Donald Trump, who is leaving, has passed a decree banning US entities from using a range of Chinese payment apps, including Alipay, Tencent Holdings’ WeChat and QQ.
On the other hand, a team from the World Health Organization (WHO), who was supposed to be in China to investigate the origins of the pandemic, raised visa issues, and Beijing’s suspicion of resisting international attempts to learn the truth behind the first stage of the virus in China.
On top of that, Chinese officials arrested more than 50 pro-democracy politicians in Hong Kong, including US citizen John Clancey, under a comprehensive national security law last year that led the US to cease to recognize Hong Kong autonomy.
5.Oil at 10-month high with Saudi ‘goodwill indicator’
After Saudi Arabia’s announcement that it will cut voluntary production of 1 million barrels per day for the next two months through an agreement that allows allied countries in OPEC + to maintain their current production levels or to make slight increases, as in the case of Russia and Kazakhstan, the prices are set at 50 for the first time in 10 months. rose on the dollar.
U.S. crude oil rose 0.6% to $ 50.22, while it rose 1.0% to $ 54.12.
Apart from the obvious concerns about short-term weaknesses in demand from increased quarantines in Europe and other regions, the motivation of this “goodwill indicator” of Saudi Arabia is unknown.
US government data will be released today, and these data may support sentiment after the American Petroleum Institute (API) figures show that crude oil stocks fell more than expected last week.