By Geoffrey Smith
Investing.com -- Georgia holds its key Senate election runoffs, China's yuan gets fixed at its highest level in 15 years, while Germany is set to extend its current partial lockdown by six weeks. Sterling recovers after the U.K. announced it's going into full lockdown for six weeks. Amazon scraps its healthcare JV with JPMorgan and Berkshire Hathaway, while OPEC and Russia remain deadlocked over how much oil to produce next month. Here's what you need to know in financial markets on Tuesday, January 5th
1. Georgia runoffs
The state of Georgia will hold runoff elections for its two Senate seats. The results will determine who gets to control the U.S. Senate for the next two years and will consequently have a profound impact on the course of U.S. fiscal policy.
Betting markets suggest that the Republican Party will still win at least one of the seats up for grabs, cementing its hold on the upper chamber.
However, the odds have narrowed since President Donald Trump stepped up his attacks on the GOP establishment in the state with a weekend phone call that appeared engineered to weaken turnout by GOP-voting Trump loyalists.
2. Yuan, Chinese stocks surge as NYSE has a change of heart
The yuan hit its highest level in over two years and the People’s Bank of China set its highest official daily fixing for the currency since 2005, against a backdrop of an economy that is still growing robustly in contrast to much of the rest of the world.
The Shanghai Shenzhen CSI 300 index also surged 1.9% to its highest level in 13 years, helped by an abrupt change of heart by the New York Stock Exchange, which abandoned its plans to delist three of the country’s biggest telecom companies. NYSE had only just confirmed its intention to start the delisting process, in line with an executive order from the Trump administration. Analysts were baffled by the about-face.
3 Stocks set to bounce a little; Amazon, healthcare in spotlight
U.S. stock markets are set to open moderately higher, recouping some of their losses from the first day of trading in 2021.
By 6:30 AM ET (1130 GMT), Dow Jones futures were up 71 points or 0.2%, while S&P 500 futures were up 0.3% and NASDAQ Futures were also up 0.3%.
All three cash indices had started the year with losses of over 1%, on a combination of concerns over the path of the pandemic and the uncertainty of the runoff elections in Georgia.
Stocks likely to be in focus later include Amazon (NASDAQ:AMZN), which on Monday abandoned its health care joint venture with JPMorgan (NYSE:JPM) and Berkshire Hathaway (NYSE:BRKa), which had been launched to big fanfare only a couple of years ago.
4. Germany set to extend partial lockdown; Pound bounces after total lockdown announced
Germany is set to extend its current restrictions on social and business life by another three weeks to the end of January, a day after the U.K. government announced a six-week national lockdown to bring surging infection numbers back under control.
Chancellor Angela Merkel is due to meet with state governors at 7 AM ET (1200 GMT) to set the course for Europe’s largest economy, which had imposed a relatively mild set of restrictions on its economy at the end of last year. That light touch was reflected earlier in figures that showed seasonally-adjusted joblessness falling by 37,000 in December, instead of the 10,000 rise expected. Retail sales for November were also strong, rising 5.6% on the year.
The euro consolidated just below the 32-month high it posted on Monday at $1.2285, while sterling recouped some of its sharp losses after Prime Minister Boris Johnson’s announcement of the new lockdown, rising 0.2% to $1.3600.
5. OPEC+ deadlocked, API inventories due
Russia and the Organization of Petroleum Exporting Countries remained deadlocked over how much oil to produce from February.
Reuters reported that talks are set to resume at 9:30 AM ET after being broken off on Monday. Russia and its neighbor Kazakhstan are both pressing for the scheduled output increase of 500,000 barrels a day to come into effect, while OPEC, with what appears to be total unanimity, wants to keep output at its present level, due to short-term weakness in demand caused by the latest surge of the Covid-19 virus.
Elsewhere, the American Petroleum Institute will report its weekly data on U.S. crude inventories at 4:30 PM ET, as usual.