Stimulus Plan Gains Traction, Jobless Claims, OPEC+ Meets - What's up in Markets

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By Geoffrey Smith 

Investing.com -- Joe Biden and Nancy Pelosi back the bipartisan $908 billion stimulus plan. OPEC meets with Russia and others to decide on its output policy for the next couple of months. Weekly jobless claims are due, Dollar General (NYSE:DG) and Krogers (NYSE:KR) report earnings and the dollar just keeps going down, down, down. Here’s what you need to know in financial markets on Thursday, December 2^nd.

1. Democrats back compromise stimulus plan

Top Democrats threw their weight behind a bipartisan proposal for a coronavirus relief package worth $908 billion, putting pressure on Senate Leader Mitch McConnell to drop his plan to bring a more modest package back to the floor of the upper chamber.

President-elect Joe Biden, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer all said the bill would be acceptable as a starting point.

The need for more relief is increasingly evident, with both the ADP payrolls report and ISM manufacturing survey for November coming in below expectations on Wednesday. Car and truck sales also fell from October.  

The U.S. had its deadliest day since the start of the pandemic, with over 2,700 recorded fatalities due to Covid-19. That takes the death toll over the last two days alone to 5,000. The number of people in hospital with the coronavirus also hit a new record high, topping 100,000 for the first time.

2. Jobless claims, Challenger job cuts survey due

The U.S. will release jobless claims data for last week at 8:30 AM ET (1130 GMT), sandwiched between two monthly labor market surveys for the month through mid-November. There’s also the Challenger monthly job cuts survey at the same time, and the ISM non-manufacturing survey at 10 AM.

Analysts expect initial claims to fall for the first time in three weeks to 775,000, but the last two reports have both indicated layoffs running at a higher pace that expected as various restrictions on business and social life hit the hospitality industry hard, in particular.

Business surveys for November released overnight showed continuing strong growth in China, and a slightly less dramatic dip in the Eurozone economy than feared. The Eurozone Composite PMI was revised up to 45.3 from an initially reported 45.1. That was still down sharply from 50 in October and puts the euro zone firmly back in contractionary territory.

3. Stocks set to open mixed

U.S. stock markets are set to open mixed, with the rotation into cyclicals and value stocks having lost momentum on Wednesday against a backdrop of weak economic data.

By 6:25 AM ET (1125 GMT), the Dow 30 futures contract was down 28 points, or 0.1%, while the S&P 500 futures contract was flat and Nasdaq futures were up 0.2%.

Stocks likely to be in focus later include Dollar General, TD Bank and Kroger, all of which are due to report earnings, and JD.com (NASDAQ:JD), which completed a well-received IPO of its healthcare arm in Hong Kong overnight.

4. Dollar hits new 31-month low

The dollar continued its descent, hitting a fresh 31-month low as the prospect of a recovery next year enticed ever more money out of safe havens and into foreign currencies. The euro rapidly gained another cent after breaking through $1.20 for the first time since April 2018, while the Australian dollar, Korean won won both hit new 30-month highs.

The Chinese yuan again tested the 2 ½ year low it hit in mid-November, shrugging off concerns about the House of Representatives vote on Wednesday that passed a bill forcing Chinese companies to delist from U.S. stock exchanges if they don’t submit to U.S. audit regulations.

The same enthusiasm that has hit the dollar has also undermined bonds and other haven assets. The yield on the U.S. 10-Year Treasury note, at 0.93%, is now testing a major trend resistance stretching back to the start of 2018, when it briefly touched 3.00%.

5. OPEC+ to decide output levels 

The Organization of Petroleum Exporting Countries and their allies will finally meet to decide their output policy for the next few months.

Expectations that the expanded bloc, which includes Russia, would freeze output at current levels in the face of the recent economic downturn in Europe and the U.S. have given way to doubts, amid reports of Russian pressure for a modest increase in output from the start of next year.

Argus Media reported that Russia has proposed increasing output by 500,000 barrels a day in monthly increments through the first quarter. The bloc is currently keeping 7.68 million b/d of output off world markets in an attempt to rebalance supply and demand since the pandemic.

The meeting starts at 8 AM ET (1300 GMT).