Stocks Set to Open Higher; Yuan Strengthens, Oil Steadies

U.S. stock markets are likely to open mostly higher. They are helped by signs that the U.S. is near to agreeing on a fiscal package. A stimulus should lighten the burden on the economy from the latest wave of the coronavirus pandemic.

Treasury Secretary Steven Mnuchin proposed a package of measures worth $916 billion on Tuesday, which House Speaker Nancy Pelosi declined. She rejected it as offering inadequate funds to state and local governments. Its size increases the pressure on Senate leader Mitch McConnell to abandon his plans for a smaller bill.

Dow Jones Futures were trading up 75 points, or 0.3% by 6:30 AM ET (1130 GMT). S&P 500 Futures climbed 0.2% and NASDAQ Futures were essentially flat on the day.

Yuan Strengthens, Chinese Inflation Goes Negative

In November, China’s annual rate of inflation turned negative for the first time in a decade. But analysts were quick to play down any suggestion of a destructive deflationary cycle. Due to a spike in pork prices last year that has now unwound, the CPI fell to 0.5% in year-on-year terms.

Since the pandemic erupted, there have been more consistent signs of deflationary pressure in Chinese producer prices. These fell in year-on-year terms for an eighth straight month in November.  

But at -1.5%, the decline was the gentlest since May. Other Chinese data showed loan growth slightly moderating, although it was still at nearly 13%.

The Chinese yuan boosted on the back of the data. For the first time in over 2 ½ years, it traded below 6.50 to the dollar in the offshore market. 

Oil Steadies after API Shock and EIA Data Due

Crude oil prices were up again after a setback on Tuesday. The American Petroleum Institute data showed another surprising boost in U.S. crude inventories, by over 1 million barrels.

A drop of over 1.5 million barrels had been anticipated. The numbers were taken as fresh evidence of slowing demand due to ever-tightening public health measures. They restrict business and social life due to the pandemic.

At 10:30 AM ET, the U.S. Energy Information Administration releases its inventory numbers.

By 6:30 AM ET, U.S. crude futures edged up 0.2% at $45.67 a barrel. Brent futures climbed 0.2% at $48.94, supported by continuing signs of demand strength in Asia, notably from Indian refiners.