Daily Briefing: The great paradox of 2020

LONDON (Reuters) – The great paradox of 2020, when a deadly pandemic met booming stock markets, remains very much alive and kicking this morning as London wakes up to new tighter social restrictions.

Hopes that a fresh U.S. $1.4 trillion stimulus package would soon be thrown at the coronavirus crisis lifted Wall Street to record highs overnight with the risk-on sentiment first spreading to Asian bourses and now to Europe.

The dollar which is a few ticks down against major currencies is indicating that risk appetite is intact at breakfast time in Paris as investors expect the Federal Reserve to keep the key overnight interest rate pinned near zero after a two-day policy meeting on Wednesday.

The old continent which is struggling to avert a possible sanitary disaster at Christmas will get results from its own economic health check up later today with the release of the closely watched Purchasing Managers’ Index (PMI) indicators.

Adding to the positive sentiment, the British pound held on to more than 1% of gains made on Tuesday with bookmakers drastically revising up the odds for what is still a very elusive Brexit trade deal.

Irish Prime Minister Micheál Martin said on Tuesday that he hoped there would be some clarity on a Brexit deal by the weekend and that he was more optimistic than a week ago that British and European Union negotiators can reach agreement.

Key developments that could provide more direction to markets on Tuesday:

-Euro zone, UK PMIs

-Fed’s two-day policy meeting

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