However, Wall Street is behaving as an Ossoff win is likely, as investors scramble to readjust their portfolios. Nasdaq futures last fell 2.2%, while yields on the standard ten-year US Treasury rose above 1% for the first time since March.
Since November, investors have been betting that the government in Washington will remain divided and limit more ambitious Democratic policy efforts that could affect corporate earnings and the stock market.
But with the democratic closure of 50 seats in the Senate, the calculation changes.
“Markets seem to be in turmoil that a Democratic wave in the Senate election will lead to higher taxes, technological regulation, a sharper environmental focus and a greater shift towards redistribution of wealth,” said Stephen Innes, Axi’s chief market strategist .
Concerns about the oppression of the technology sector are the main and central issue. Facebook’s share is down 3% in pre-trading, while shares in Amazon, Apple and Google’s older Alphabet are down more than 2%.
However, the extent of the risk remains to be seen. Alec Phillips, chief American political economist at Goldman Sachs, pointed out on Wednesday that 60 votes would still be needed for most Senate legislation. Two-party support “will still be needed to pass legislation on issues such as infrastructure, a minimum wage increase, technological regulation and environmental policy,” he said.
“While change in the U.S. is in the air, changes in U.S. legislation may not be very drastic,” Berenberg chief economist Holger Schmieding told clients, noting that more progressive bills could fall with moderate Democrats.
In addition, a “blue wave” is expected to release another round of stimulus spending to support the economy during the pandemic – a major positive effect for markets. According to Phillips, Goldman Sachs has signed another $ 600 billion package “in the short term” with a pencil.
Oil prices reach their highest level since February
The decision by Saudi Arabia to voluntarily reduce oil production has pushed global crude prices to their highest level in more than ten months.
The latest: The kingdom said on Tuesday it would cut production by 1 million barrels a day from January levels.
“We are doing this willingly and we are doing it with the aim of supporting our economy, the economy of our colleagues,” Saudi Energy Minister Prince Abdulaziz Bin Salman told a news conference.
In general, the Organization of the Petroleum Exporting Countries and related producers agreed to keep production steady in February and March, report my CNN business colleagues Charles Riley and Chris Liakos. While Russia and Kazakhstan will produce more oil over the coming months under an agreement reached this week, the impact could be offset by Saudi Arabia’s setback.
The news sent Brent crude futures, the global benchmark, to $ 54.24 a barrel. Prices have not been that high since February last year. US oil trades at $ 50.24 a barrel.
Except for the headlines, however, analysts are concerned that the disagreement between oil producers is widening as the pandemic continues. While some countries – such as Saudi Arabia – are concerned that new closures and economic uncertainty could weigh on demand, others, such as Russia, are eager to pump again.
Louise Dickson, analyst at Rystad Energy, said that two factions had emerged within the OPEC + group.
“The division is a blow to the alliance, which in turn raises the question of whether its members with a very different agenda and production structure can continue to work together,” Dickson said.
The last time the group split in March was a short but intense battle for market share between Saudi Arabia and Russia, which caused oil prices to plummet.
Trump confronts China again with new executive order
President Donald Trump has been putting pressure on Chinese technology companies in the last days of his government, although it is not clear that his latest actions will have a real bite.
Remember: previous attempts aimed at Chinese technology enterprises got into trouble.
An order banning WeChat downloads in the United States has been temporarily blocked by a federal judge, and several courts have issued temporary orders against the government’s efforts to ban the short-form video app TikTok.
The new order will also take effect within 45 days. This is after Trump left office.
“The Trump administration is still rushing through its list of fines to curb relations between the United States and China in hopes of retaliating against China, further weakening and binding ties. [President-elect Joe] Biden’s hands, “said Scott Kennedy, senior adviser at the Center for Strategic and International Studies in Washington. Although the restrictions on these applications are” very disruptive “, it remains to be seen whether they will actually be implemented, he said. added. .
Following
The ADP report for private employment for December arrives at 08:15 ET. U.S. crude oil inventory follows at 10:30 a.m.
Come tomorrow: The initial claims for unemployment benefits are expected to rise to 800,000.