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Wall Street climbs ahead of Biden's inauguration

·3-min read
Janet Yellen's testimony in her confirmation hearing for the US Treasury secretary role was closely watched by traders

Wall Street saw solid gains on Tuesday ahead of US President-elect Joe Biden's inauguration as investors considered his plans to revive the economy, though European indices were weaker as the Covid-19 pandemic wore on.

Dominating the news cycle for New York traders was the confirmation hearing of Janet Yellen, Biden's nominee to lead the Treasury, who fielded questions from senators on the incoming administration's $1.9 trillion stimulus proposal.

Investors apparently liked what they heard, with the Dow gaining 0.4 percent and the tech-rich Nasdaq climbing 1.5 percent.

Stephen Innes, chief global market strategist at Axi, said the uptick reflects "the market giving the Biden policy agenda an early stamp of approval" a day before his administration takes office.

Oil prices gained on optimism of a global economic recovery and vaccine rollouts that are offsetting concerns about the emergence of new coronavirus strains, while the dollar was mixed.

- Yellen's remarks -

Biden has vowed swift action to get the world's largest economy back on its feet, though he will have to get the stimulus package -- one of two bills he has promised American voters -- through a Congress only narrowly controlled by his Democrats.

At her hearing, Yellen warned that without more stimulus, the United States could be in for renewed economic pain.

She also emphasized that the dollar's value should be determined by foreign exchange markets, and expressed support for digital tax negotiations taking place under the auspices of the Organisation for Economic Co-operation and Development.

A global agreement would allow the US to collect taxes from corporations that have moved their headquarters overseas, Yellen said.

"It would enable us to collect a fair share from corporations, while maintaining the competitiveness of our businesses and diminish the incentives that American companies now have to offshore activities," she said.

In New York, traders also scoured US corporate results, which Oanda market analyst Craig Erlam suggested might "spark markets back into life."

In Germany meanwhile, investor confidence jumped in December, the ZEW institute's monthly barometer showed.

"The announcement of imminent vaccine approvals makes financial market experts more confident about the future," ZEW President Achim Wambach said, but the news nonetheless failed to push the DAX index of leading German shares into the black.

That was because German authorities were set to announce the extension and tightening of a partial lockdown beyond January owing to growing fears over the new coronavirus variants.

- Key figures around 2245 GMT -

New York - Dow: UP 0.4 percent at 30,930.52 (close)

New York - S&P 500: UP 0.8 percent at 3,798.91 (close)

New York - Nasdaq: UP 1.5 percent at 13,197.18 (close)

EURO STOXX 50: DOWN 0.2 percent at 3,595.42 (close)

London - FTSE 100: DOWN 0.1 percent at 6,712.95 (close)

Frankfurt - DAX 30: DOWN 0.2 percent at 13,815.06 (close)

Paris - CAC 40: DOWN 0.3 percent at 5,598.61 (close)

Tokyo - Nikkei 225: UP 1.4 percent at 28,633.46 (close)

Hong Kong - Hang Seng: UP 2.7 percent at 29,642.28 (close)

Shanghai - Composite: DOWN 0.8 percent at 3,566.38 (close)

Euro/dollar: UP at $1.2126 from $1.2077 at 2200 GMT on Monday

Dollar/yen: UP at 103.90 yen from 103.69 yen

Pound/dollar: UP at $1.3632 from $1.3587

Euro/pound: UP at 88.95 pence from 88.89 pence

West Texas Intermediate: UP 1.3 percent at $53.02 per barrel

Brent North Sea crude: UP 2.4 percent at $56.04 per barrel