By Geoffrey Smith
Investing.com -- Joe Biden signals no return to the status quo ante on China. Salesforce (NYSE:CRM) snaps up Slack for $27.7 billion. Stocks are set for a breather as the U.K. becomes the first western country to approve a Covid-19 vaccine. ADP release its private payrolls report for November. And oil wobbles while OPEC bickers after another rise in U.S. inventories. Here's what you need to know in financial markets on Wednesday, December 2nd.
1. Biden will keep Trump’s tariffs on China for now
President-elect Joe Biden said he won’t immediately remove the tariffs on Chinese imports when he takes power in January, signalling that trade relations between the world’s two largest economies are likely to stay testy even after Donald Trump leaves the White House.
“I’m not going to make any immediate moves, and the same applies to the tariffs. I’m not going to prejudice my options,” Biden told the New York Times in an interview.
Biden said he would pursue policies targeting China’s “abusive practices,” such as “stealing intellectual property, dumping products, illegal subsidies to corporations” and forcing “tech transfers” from U.S. companies to Chinese counterparts.
Elsewhere in the interview, Biden repeated his willingness to rejoin the UN-backed JCPOA agreement with Iran if its strict compliance with the deal can be verified.
2. Salesforce snaps up Slack
Salesforce (NYSE:CRM) agreed to buy Slack (NYSE:WORK) for $27.7 billion in the second 11-digit M&A deal of the week, following on from S&P Global's (NYSE:SPGI) $44 billion move for IHS Markit Ltd (NYSE:INFO).
The deal will strengthen Salesforce’s presence in the enterprise software market and aims squarely at providing tougher competition for Microsoft (NASDAQ:MSFT), whose Teams app has dented Slack’s sales growth since the latter floated last year.
The deal – Salesforce’s biggest ever - also gives Slack shareholders a cashout at a level that seemed unlikely for most of the last 18 months.
3. Global stock rally cools, but metals party on
The rally in global stocks petered out overnight, after a blistering start to December fired by more encouraging news on the vaccine front. By morning in Europe, however, even the news that the U.K. had approved emergency use off the Pfizer/BioNTech Covid-19 vaccine wasn’t enough to sustain the move, and the benchmark Stoxx 600 fell 0.3% by late morning in Europe.
U.S. stocks are also touted to open lower, after both the S&P 500 and Nasdaq Composite closed at new record highs on Monday. By 6:30 AM ET (1130 GMT), the Dow 30 futures contract was down 106 points or 0.4%, while S&P 500 futures and NASDAQ Futures were both down 0.2%.
It’s a different story in currencies and metals markets, however, where the dollar’s weakness is continuing to underpin both precious and industrial metals. Copper has hit a seven-year high this week, while aluminum futures hit their highest in over two years overnight. The dollar index, meanwhile, slumped to a new 30-month low.
4. Stimulus talks restart; ADP eyed
The dollar’s weakness has been driven in part by expectations of further loosening of monetary policy and an expansive fiscal policy once the dovish Janet Yellen gets her hands on the levers of power. Yellen warned of “devastation” if more isn’t done now to support the economy, at a time when the U.S. hospital system is increasingly struggling to cope with the surge in Covid-19 cases.
Against that backdrop, talks on a fiscal stimulus package resumed for the first time since the election on Tuesday, but soon ran into opposition from Senate Leader Mitch McConnell.
Treasury Secretary Mnuchin and Fed Chair Power continue their testimony in Congress later but are unlikely to add much to Tuesday’s comments. Of more interest will be the November ADP private payrolls report due at 8:15 AM ET (1315 GMT), where an increase of 410,000 jobs from October is expected.
5. Oil wobbles as OPEC bickers, U.S. inventories rise
Crude oil prices retreated amid doubts over OPEC output policy and under pressure from a third straight weekly increase in U.S. crude inventories.
The American Petroleum Institute’s data showed crude stockpiles rose by over 4 million barrels last week, much more than expected. While the weekly consumption pattern is hard to read because of distortions from the Thanksgiving holiday, the figures appear to support the notion that U.S. demand is weakening as restrictions on business and social gathering tighten across the U.S.
The government’s inventory data are due at 10:30 AM ET, while OPEC is now halfway through a third day of negotiations about whether or not to raise output modestly in January.
Crude prices fell 0.7% to $44.42 a barrel by 6:30 AM ET, while Brent was down 0.5% at $47.20.