US stock futures are rising on stimulus bets

Congress leaders on Wednesday closed a coronavirus deal worth about $ 900 billion, including a new round of direct payments to households. After months of stalemate, the emerging agreement marked a breakthrough at a critical time in the pandemic, with vaccine distribution underway, but hospital admissions hit record highs.

Investors broadly think that a fresh dose of stimulus is needed to surround the economy until the end of winter, and widespread vaccinations have the potential to get the virus under control by 2021. are restrictions on new businesses in some states.

“The incentive is key,” said Mary Nicola, portfolio manager at PineBridge Investments.

“Any stimulus is a good stimulus at this point, especially if you are going through a rough patch,” added Ms. Nicola. “This will boost recovery a little bit more.”

Weekly data on initial claims for unemployment benefits will shed new light on the state of the economy at 8:30 a.m. ET. The number of applications for unemployment rose at the beginning of this month as a sign of a new downturn in the labor market. They likely fell back slightly in the week ending Dec. 12, while remaining at high levels, economists predicted.

Ahead of the bell in New York, shares in Lennar rallied nearly 4% after the homebuilder said home deliveries and orders would be stronger in the first quarter than analysts expect.

The international markets also progressed on Thursday. The regional Stoxx Europe 600 gained 0.5%, led by shares in economically sensitive commodity producers and retailers in addition to media companies. China’s Shanghai Composite Index ended up 1.1% higher. The Japanese Nikkei 225 recorded 0.2%.

Among European equities, shares in WPP were up nearly 5% after the ad giant said sales are recovering faster than expected from the coronavirus shock. Rio Tinto’s London-listed shares rose 1.4% after the mining company appointed Chief Financial Officer Jakob Stausholm as its new CEO.

In bonds, the yield on 10-year Treasury paper rose slightly to 0.926%, from 0.920% on Wednesday. The dollar extended its recent slide. The WSJ Dollar Index fell 0.4% after falling to its lowest level since April 2018 on Wednesday.

That drop came after the Federal Reserve said $ 120 billion a month in asset purchases will continue until substantial progress is made toward its employment and inflation targets. The updated guidelines underline that the central bank will continue to support financial markets for the foreseeable future, PineBridge’s Ms. Nicola said.

The stimulus package being discussed in Washington would include $ 300 per week in improved unemployment insurance and vaccine distribution funding, in addition to direct checks. Congressional officials noted that negotiations were continuing and that no final agreement had been reached.

Time is short. Lawmakers expect to link the aid bill to an annual expense account needed to keep the government going after current funding expires at 12:01 a.m. on Saturday.

“We are clearly getting very close to the period when it will be quite difficult to get a deal on the line,” said Edward Park, Chief Investment Officer at Brooks Macdonald. “Giving an incentive here is certainly a positive step by step.”

Indications that the UK and the European Union could negotiate a trade deal before Britain leaves the bloc in early 2021 have also boosted markets in recent days, Mr Park said. Last-minute negotiations sharpened focus on the Bank of England’s decision on Thursday to keep the benchmark interest rate at 0.1%, maintain government bond purchases and expand a bank financing program.

Restrictions designed to suppress the coronavirus will weigh on the UK economy this quarter and into the first three months of 2021, the central bank said.

The weakening dollar boosted commodity markets. Gold futures rose 1.2% to $ 1,881.10 a troy ounce.

Three-month copper forwards were up 1.4% to $ 7,920.50 a ton on the London Metal Exchange.

Write to Joe Wallace at [email protected]