UK vaccine approval lifts FTSE

An interesting trading session but not one that has had any profound impact on the markets, with stocks in Europe quite mixed on the close, with the exception of the FTSE 100.

The UK index has been the clear outperformer, buoyed by the MHRA's approval of the Pfizer/BioNTech vaccine, allowing for rollout to the most vulnerable from next week. Other regulators will likely follow over the next couple of weeks but the UK regulator has been rapid in its approval, providing some pre-festive period cheer for the country on the day it emerged from lockdown.

The FTSE also appears to have been lifted by the movements in the pound earlier in the session as it appeared to come under some Brexit strain. I've said for some time that it's remarkable how relaxed traders have been given how they've acted the last four years and how close to the final deadline we are. 

Four weeks from tomorrow, the UK leaves the transitional period and there's still no deal in place. What's more, the same old problems remain the sticking points. I remain confident that a deal will be struck as not to do so would be an atrocious failure from all concerned at the worst possible time. Despite all the claims, I truly believe no one wants to be responsible for that.

But that doesn't mean markets have been particularly well positioned. There has been little to no mitigation in case the worst should happen and it seems that Barnier's comments today have caused a bit of a wobble. Only very minor still, compared to what we could see in the event of no deal but a sign perhaps that the confidence has been a little shaken.

A failure to progress talks in the coming days may see that confidence shaken further which may take its toll on the pound, in particular. It will be interesting to see how the FTSE responds to that given the negative correlation we've seen in the past. The difference now being that we're on the verge of the ultimate cliff-edge. Time is almost up.

Hopes build around stimulus deal alongside funding bill

It's not just here in London that there's been a lack of urgency in recent months. The fact that we're still talking about stimulus talks on Capitol Hill given the circumstances is astounding but then, it is 2020. It would appear there is renewed vigor to make progress on a support package but as ever, the Republicans and Democrats remain far apart on what that would be.

A bipartisan proposal doesn't appear to have any more chance of passing. In reality, the best hope may be something negotiated alongside the funding bill which is needed to avoid a partial government shutdown on 11 December. House Majority Leader Steny Hoyer appeared to hint at this today but any agreement would likely be very short-term and warrant more action early in the new year. Still, better than nothing which is the best we can hope for, it seems.

The comments may have contributed to US stock markets climbing out of negative territory as they approached the middle of the session. The big jump in yields came a day earlier but they are adding to these gains again today, highlighted the improved optimism at the prospect of a deal. 

Oil jumps ahead of OPEC+ decision

The regulatory approval of the Pfizer vaccine in the UK and prospect of more stimulus in the US may be helping to support oil prices today. Brent and WTI have both rebounded strongly and are once again pushing last weeks highs. Both saw strong technical support around their summer peaks and have since rallied strongly. Whether that can be sustained will depend on the outcome of tomorrow's OPEC+ meeting.

Disagreement forced the group to push back Tuesday's meeting until a solution could be found. It was previously expected that planned increases of two million barrels in January would be delayed but with prices having rallied strongly over the last month, some seemingly don't see the need, given the risk of handing an advantage to US shale again.

Today's rally may suggest expectations may have been pared back and traders may be comfortable with a more phased in approach. A lot of positivity is priced in at this point though so can't write off the possibility of any announcement being a profit taking catalyst, barring a significant over delivery. 

Gold enjoying some reprieve

Gold is continuing to see some reprieve after coming off its lows on Tuesday. The prospect of stimulus was one of the upside risks for the yellow metal and all the speculation is giving it a big lift. Whether Congress can deliver and gold can capitalize on it is another thing. There remains a major barrier above around $1,850; a break above that could be a significant move, although significant near-term challenges remain.

The path of least resistance is still below in my view, in the near-term at least. Partly due to my lack of faith in Congress to deliver in any meaningful time or way. Longer term I don't think golds flirtation with $2,000 is over but I do think it may test its recent lows again first.

Bitcoin pausing ahead of $20,000

Bitcoin hit another record high yesterday before paring back and its struggling to take another run so far today. This is a big psychological barrier, albeit one I fully expect it to overcome and probably very soon. Once it does, the hype around it could propel it much higher initially. 

Should it fail to break those levels then it could be setting up for quite a punchy double top and treat us to the kind of correction we've seen in the past. I am not currently of the view that this will happen at this point, I still feel we're in early bitcoin hype mode. Don't get me wrong, it's a case of when rather than if but I don't think the when is now. Bitcoin always has surprises up its sleeve though. It's what makes it such an interesting instrument to follow, albeit a highly speculative, volatile one.