Stocks shrug off Trump's stimulus threat; Brexit trade deal hopes boost pound

By April Joyner NEW YORK (Reuters) -Stocks rose on Wednesday as investors waved away a threat by U.S. President Donald Trump not to sign a pandemic relief bill, while the British pound soared on rising expectations of a Brexit trade deal. In a video posted on Twitter, Trump said a stimulus bill, agreed upon after months of wrangling in Congress, was 'a disgrace' and that he wanted to increase 'ridiculously low' $600 payments for individuals to $2,000.

Reuters December 24, 2020 00:05:42 IST
Stocks shrug off Trump's stimulus threat; Brexit trade deal hopes boost pound

Stocks shrug off Trumps stimulus threat Brexit trade deal hopes boost pound

By April Joyner

NEW YORK (Reuters) -Stocks rose on Wednesday as investors waved away a threat by U.S. President Donald Trump not to sign a pandemic relief bill, while the British pound soared on rising expectations of a Brexit trade deal.

In a video posted on Twitter, Trump said a stimulus bill, agreed upon after months of wrangling in Congress, was "a disgrace" and that he wanted to increase "ridiculously low" $600 payments for individuals to $2,000.

The benchmark S&P 500 U.S. stock index nonetheless rose in morning trade as cyclical sectors such as energy and financials expected to benefit most from an economic recovery led in percentage gains. S&P 500 futures had fallen overnight in response to Trump's threat but later recovered.

Investors said they still believed a fiscal package would come soon, whether under Trump or President-elect Joe Biden.

"Stocks, rightly so, are looking through what is political theater from Trump," said Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions.

In Europe, the STOXX index gained 0.97% after reports that Britain and the European Union were close to a trade agreement after difficult, protracted negotiations, with the end of year deadline looming. A senior European diplomat told Reuters on Wednesday that a deal was imminent.

MSCI's gauge of global stocks in turn rose 0.60%.

On Wall Street, the Dow Jones Industrial Average rose 191.4 points, or 0.64%, to 30,206.91, the S&P 500 gained 17.37 points, or 0.47%, to 3,704.63 and the Nasdaq Composite added 5.64 points, or 0.04%, to 12,813.55.

The Brexit trade deal news also boosted sterling, which gained 1.12% against the dollar to $1.3527. In a further shot in the arm for the pound, Paris lifted its ban on freight coming from Britain, which it had enacted in response to a fast-spreading COVID-19 variant in the United Kingdom.

"Sterling is off its lows - there's a little twinkle of optimism around that deal," said Jane Foley, head of FX strategy at Rabobank.

Foreign exchange markets broadly reflected optimism toward U.S. fiscal stimulus and global growth. The euro rose 0.25% to $1.2192, while the Australian dollar, considered a riskier currency, advanced 0.88% to $0.7586.

Conversely, the safe-haven U.S. dollar resumed its decline. The dollar index fell 0.17%.

In accordance with Wednesday's risk-on sentiment, U.S. Treasury yields jumped to their highest level since Dec. 7. They received a lift from the Brexit trade deal developments after having fallen earlier in response to Trump's stimulus comments. The yield between two- and 10-year yields steepened to its the widest spread since October 2017. European bond yields likewise climbed.

Benchmark 10-year U.S. Treasury notes last fell 14/32 in price to yield 0.9646%, from 0.918% late on Tuesday.

In oil markets, the weakening in the dollar supported prices, helping them overcome an unanticipated rise in U.S. crude oil inventories. Brent and U.S. crude both rose around 2%.

The weaker dollar also helped to boost gold, which added 0.7% to $1,871.91 an ounce.

Meanwhile, copper prices resumed their advance toward multi-year highs as investors regained optimism toward future economic growth.

(Additional reporting by Tom Westbrook in Singapore, Carolyn Cohn, Sujata Rao and Karin Strohecker in London; Editing by Steve Orlofsky and Mark Heinrich)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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