Wall Street, however, is acting as if an Ossoff win is likely as investors rush to adjust their portfolios. Nasdaq futures fell 2.2% for the last time, while 10-year US Treasury yields rose above 1% for the first time since March.
Since November, investors have been betting that the Washington government would remain divided, limiting more ambitious democratic policy efforts that could hit corporate earnings and the stock market.
But as Democrats approach 50 seats in the Senate, that calculation is changing.
“Markets seem to be concerned that a democratic blow to the Georgia Senate election results will lead to higher taxes, technical regulation, sharper environmental awareness and greater steps towards wealth redistribution,” said Stephen Innes. chief strategist in the world market.
Concerns about the crackdown on the tech sector are central. Facebook’s shares are down 3% in premarket trading, while shares in Amazon, Apple and Google parent Alphabet are all down more than 2%.
However, the magnitude of the risk remains under discussion. Alec Phillips, the chief US political economist at Goldman Sachs, pointed out on Wednesday that 60 votes will still be needed for most Senate legislation. Bipartisan support “would still be needed to pass legislation on such things as infrastructure, minimum wage hike, technical regulations and environmental policies,” he said.
“While there is change in the air for the US, changes in US law may not be very radical,” Berenberg chief economist Holger Schmieding told clients, noting that more progressive bills could fall flat among moderate Democrats.
In addition, a “blue wave” is expected to unleash another round of stimulus spending to support the economy during the pandemic – a big positive for the markets. Phillips said Goldman Sachs has signed another $ 600 billion package “in the near term” in this scenario.
Oil prices have reached their highest level since February
Saudi Arabia’s decision to voluntarily reduce oil production has pushed global crude oil prices to their highest levels in more than 10 months.
The latter: The kingdom said on Tuesday that it will cut production by 1 million barrels per day from January’s levels.
“We do it willingly and we do it with the aim of supporting our economy, the economies of our colleagues,” said Saudi Energy’s Prince Abdulaziz Bin Salman at a news conference.
In general, the Organization of the Petroleum Exporting Countries and its related producers have agreed to keep production stable in February and March, my CNN Business colleagues Charles Riley and Chris Liakos report. While Russia and Kazakhstan will produce more oil in the coming months under a deal reached this week, the impact may be offset by Saudi Arabia’s downturn.
The news has sent Brent crude oil futures, the global benchmark, to $ 54.24 a barrel. Prices have not been this high since February last year. US oil is trading at $ 50.24 a barrel.
But outside of the headlines, analysts are concerned that disagreements between oil producers are growing as the pandemic progresses. While some countries – such as Saudi Arabia – are concerned that new lockdowns and economic uncertainty may weigh on demand, others, such as Russia, are eager to get back on track.
Rystad Energy analyst Louise Dickson said two factions have emerged within the OPEC + group.
“The division is a blow to the alliance and raises again the question of whether its members, with very different agendas and production structures, can continue to work together,” said Dickson.
The last time the group split, in March, saw a brief but intense battle for market share between Saudi Arabia and Russia, causing oil prices to collapse.
Trump is once again confronting China with a new executive
President Donald Trump continues to put pressure on Chinese tech companies during the closing days of his administration – though it’s not clear that his latest moves will really catch on.
Remember, past efforts targeting Chinese tech companies have run into trouble.
An injunction to ban WeChat downloads in the United States was temporarily blocked by a federal judge, and multiple courts have issued temporary injunctions against the government’s attempts to ban the short video app TikTok.
The new order will also take effect in 45 days. That’s after Trump left office.
“ The Trump administration is still rushing through its list of sanctions to restrict US-China relationship, hoping to get China to retaliate, further deteriorate ties and [President-elect Joe] Biden’s hands, ” said Scott Kennedy, senior advisor at the Center for Strategic and International Studies in Washington. While the restrictions on these apps are supposed to be “ very disruptive, ” it remains to be seen if they will actually be implemented, he added. .
Next one
The ADP private employment report for December arrives at 8:15 a.m. ET. US crude oil stocks follow at 10:30 a.m. ET.
Available tomorrow: First claims for unemployment benefits are expected to reach 800,000.