Oil prices rise after Saudi Arabia pledges voluntary output cut; Nasdaq futures fall as investors prepare for ‘blue sweep’ of Congress
The IHS Markit services survey for Spain is out. It shows an improvement, with the main index rising to 48 in December, from 39.5 in November – the smallest fall in activity in five months. Any reading below 50 indicates contraction.
The downturn of Spain’s services economy continued into the final month of 2020, albeit to a much weaker degree than seen recently. Activity and new work both continued to fall, but at slower rates, whilst confidence about the future improved markedly to a two-and-a-half year high on the back of positive vaccine developments related to the global coronavirus disease 2019 (COVID-19) pandemic.
The US dollar has also slipped on the prospect of the Democrats taking control of the US Senate, which could pave the way for higher spending by president-elect Joe Biden and may lead to higher inflation. Against a basket of major currencies, the dollar hit its lowest level since April 2018.
Analysts reckon that a Democrat-controlled Senate would be positive for global economic growth, boosting demand for riskier assets outside the US, but negative for bonds and the dollar. This has pushed up US and UK government bond yields this morning. UK 10-year gilt yields rose to a two-week high while 20- and 30-year gilt yields also climbed.
A Democratic-led government is expected to add more stimulus to help mitigate the virus crisis and… that means that there’s going to be a weaker dollar.