Daily Briefing: Deadlines, deadlines

By Danilo Masoni and Sujata Rao

No post-Brexit deal yet. If indeed negotiators face a Wednesday deadline, less than 48 hours remain to iron out differences and avoid a chaotic start to 2021 for nearly $1 trillion worth of trade flows.

Traders seem hopeful that face-to-face meetings between UK Prime Minister Johnson and EU Commission head van der Leyen can break the deadlock so sterling has recouped more than half of Monday’s 1.6% slump. However, option markets may better reflect market nerves and implied volatility gauges are shooting higher.

Here is another deadline. EU officials gave Hungary and Poland until today to present a compromise proposal or risk being left out of the EU recovery fund disbursements.

And later in the day, U.S. lawmakers will continue debating a stimulus package and a bill to avert a government shutdown from Friday. At least Japan came through on the stimulus front with a new $708 billion package to speed up a recovery.

But it didn’t prevent Japanese stocks shedding 0.3%. European and U.S. equity futures are flatlining too and the relentless march of COVID-19 seems to have given some people second thoughts about selling big tech stocks for oils and financials; Nasdaq hit a record on Monday while the Dow and S&P 500 slipped.

There are some positive glimmerings on the growth front, with Japanese household spending rising in October for the first time in over a year and revised extimates showing the economy grew more than initially estimated in July-September.

Hopes are Germany’s ZEW indicator due at 10 GMT will cheer too, after Tuesday’s robust industrial output figures.

On the corporate front, a U.S. judge has blocked restrictions on Chinese-owned TikTok. Dealmaking continues, with private equity group EQT buying out air conditioner wholesaler Beijer Ref in a $1.1 billion deal.

Finally, an example of the disconnect between hope and the current grim reality. AirBnB’s stock launch may raise $3.09 billion after it upped its price range to $56-$60 a share, from $44. The bet clearly is that holiday rentals will surge once a vaccine-related economic recovery takes hold.

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

-UK BRC retail sales

-Germany ZEW

-Brazil central bank meeting