Stocks edge higher on eve of Biden inauguration
LONDON: European stock markets edged up yesterday following a strong showing in Asia ahead of a key speech from US Treasury secretary nominee Janet Yellen. The dollar was mixed on the eve of Joe Biden’s inauguration as US president, with all eyes on his vast $1.9-trillion stimulus plan.
Oil prices jumped, helped by investor optimism over the global economic recovery and vaccine rollouts that are offsetting concerns about soaring virus infections.
‘A little optimistic’
This week’s key event is Biden’s inauguration today, with the Democrat vowing swift action to fight pandemic fallout and boost the ailing US economy.
First, investors were to keep close tabs on Yellen, who was expected to tell lawmakers that the world’s top economy could suffer if they do not approve Biden’s stimulus. “The mood in Europe is a little optimistic... as traders look ahead to Janet Yellen’s testimony,” said analyst David Madden at trading firm CMC Markets UK.
“Yellen... is tipped to tell politicians the government needs to ‘act big’ as a way to support the economy.” Global coronavirus cases broke 95 million this week while deaths have topped two million, putting pressure on governments to quickly distribute vaccines while at the same time imposing strict, economically painful lockdowns.
“It will be Yellen’s task today to explain why such aggressive spending is required to help the economic recovery along,” added Madden. “The former head of the Fed will touch on the excessive debt levels that will be racked up because of the stimulus but at the same (time), borrowing costs are very cheap.”
Traders were looking ahead also to US corporate earnings, including from home entertainment giant Netflix, Bank of America and Goldman Sachs. “As has been the case for the last week or so, markets are
lacking any real direction,” said Oanda analyst Craig Erlam. “Perhaps we are just seeing a holding pattern ahead of the inauguration and in anticipation of a flurry of earnings reports.”
Goldman Sachs said yesterday the firm’s fourthquarter profits more than doubled on a strong performance across operations and lower costs. Goldman profits soared to $4.4 billion in the final quarter of the year, a 153 percent increase compared with the year-ago level, again underscoring the investment bank’s might at a time when other sectors have been devastated by the coronavirus pandemic. Revenues rose 18 percent to $11.7 billion.
Goldman’s results reflected surging revenues in financial advising services, good trading activity and much lower expenses for litigation and regulatory matters. And amid the COVID-19 restrictions, the financial giant saw lower travel and entertainment costs. “It was a challenging year on many fronts, and I am deeply proud of how our people helped clients respond to the economic disruption brought on by the pandemic and the extreme market volatility experienced over the past months,” Chief Executive David Solomon said. —AFP