Stocks Move Lower As Traders Watch Georgia Runoff Elections
Traders Wait For The Results Of Runoff Elections In Georgia
S&P 500 futures are losing ground in premarket trading while traders watch the runoff elections in Georgia. Two seats are at stake. If Democrats win both seats, they will have control of the Senate as Kamala Harris would be the tie-breaking vote as vice president.
In this scenario, the U.S. dollar will likely find itself under additional pressure as Democrats favor large stimulus packages to support the economy. The potential reaction of the stock market is less clear as expectations of additional stimulus may outweigh concerns about stronger regulations.
It should be noted that the market does not like uncertainty so any final result of the elections may serve as a positive catalyst in the near-term.
Oil Moves Higher While OPEC+ Continues Negotiations
Yesterday, OPEC+ had to stop its meeting as Saudi Arabia reportedly wanted to cut production by 500,000 barrels per day (bpd) in February while Russia pushed for a production increase of 500,000 bpd.
As a result, the group studied three scenarios which included a production cut, a stable level of production, and a production increase. It looks like traders believe that OPEC+ members will find middle ground and keep production at current levels which will be bullish for the market.
An additional production cut of 500,000 bpd will likely provide significant support to the oil market but this scenario has low probability as many OPEC+ members want to increase their revenues and are not ready to cut production again.
Britain Begins Its Third Coronavirus Lockdown
The new, more infectious strain of coronavirus which emerged in the UK has finally forced the country to impose a third lockdown in order to contain the spread of the virus.
The new strain has already been found in various countries, and the spread of this new strain may present a serious risk for the world markets so traders should watch the story closely.
If the spread of the strain is mostly limited to UK, stocks should be able to ignore it. However, if the strain starts spreading across Europe and forces European countries to introduce new lockdowns, markets will find themselves under pressure.
For a look at all of today’s economic events, check out our economic calendar.