Some economic reaction to the US data - and particularly the higher-than-expected initial jobless claims.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said:

The second straight increase in initial claims is consistent, unfortunately, with the message from the Homebase small business employment data, namely, that the labor market is deteriorating again in the face of the Covid third wave. We expect claims to keep rising for several more weeks, because people are retreating from social interactions, and state and local authorities are adding restrictions to dining and other indoor commercial activity across the country.

The need for further policy easing ought to be obvious, though Congress apparently has better things to do.

Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago, said, via Reuters:

There is some concern that the labour market is taking a step backwards as opposed to forward on the heels of stimulus having run out and no more stimulus packages in the offing.

Here is a story that few would have predicted a decade ago, when Portugal was on the verge of financial collapse: some Portuguese government bonds are heading for negative-yielding territory, which would mean investors effectively paying the country to borrow money.

During the financial crisis that began in 2008, Portugal was labelled (in a very uncomplimentary acronym) as one of the “PIGS” - the EU nations with unsustainable debt piles. That made Portuguese debt an unattractive prospect.

A decade of spending cuts (pictured) and quantitative easing (bond purchases that raise prices and push down yields) has flipped that logic on its head. The Portuguese 10-year yield hit 0.016% on Wednesday. Reuters reports:

Italian and Portuguese bond yields hit fresh record lows on Wednesday, with Portugal’s 10-year yield in striking distance of negative territory as upbeat sentiment globally provided another incentive to pile into Europe’s lower rated bond markets.

World shares rallied to a record peak after the formal start of U.S. President-elect Joe Biden’s transition to the White House and on growing confidence surrounding Covid-19 vaccines.

For southern European bond markets, already well supported by aggressive European Central Bank stimulus, the rally in risk assets globally has provided an additional boost.

Chancellor Rishi Sunak’s spending review has finished (albeit the reaction is just beginning). Here are some of the key economic points, reported by the Guardian’s economics correspondent, Richard Partington:

• The chancellor says forecasts from the Office for Budget Responsibility (OBR) show the economy will contract by 11.3% this year, the biggest decline in three centuries.
• GDP will grow by 5.5% next year, 6.6% in 2022, 2.3% in 2023, 1.7% in 2024 and 1.8% in 2025.
• This compares with estimates made at the start of November from the Bank of England for an 11% fall in 2020.

And in one of the most controversial moves, Sunak also announced that spending on the aid budget will fall below 0.7%, breaking a Conservative manifesto promise.

And another handy graph for some context on the huge increase in US GDP - a confirmed record. It looks a lot less impressive alongside the previous quarters.

With the Covid recession taken into account, by my reckoning the US economy is still about 14% smaller than it was at the start of the year.

Here’s a handy graph from the US Department of Labor showing the initial jobless claims picture:

In normal times the numbers being reported now would be setting off alarm bells, but since the pandemic the volatility in the US economy has adjusted economists’ perspective somewhat.

The trend has been decreasing, but it looks a long way from returning to the humming economy at the start of the year - many analysts suggest this is a major reason that Donald Trump became a rare one-term president.

A quick skate across some of the other data releases just out:

• US durable goods orders rose more than expected in October. Orders increased by 1.3% compared to the month before, faster than the 0.9% expected by economists.
• The second estimate of US GDP showed output increased at an annual rate of 33.1% in the third quarter of 2020, unadjusted from the first reading.
• Profits of US domestic nonfinancial corporations increased $431.2bn, in contrast to a decrease of $145.9bn during the second quarter.

Here’s a reminder of the barrage of economic data that the US is about to unleash (add five hours for the UK time):

Financial markets are so far mostly unmoved by Rishi Sunak’s spending review, even as the chancellor delivers a warning that the UK economy will not recover its lost output fully until the end of 2022.

The pound has edged towards a drop of 0.1% against the US dollar at about $1.335, and the FTSE 100 also briefly nudged lower, down by 0.7% at 6,388 points.

The rally on the FTSE 100 has well and truly melted into air: London’s blue-chips have now lost 0.6% today.

It’s those cyclical stocks from earlier - like Barclays, Lloyds Banking Group, Rolls-Royce - that are still dragging the index back.

And Rolls-Royce, the jet engine maker, has just had a mention in parliament from Boris Johnson, who says he is keen to work with the company on securing its long-term future. Rolls-Royce has been badly hit by the pandemic, which has seen a plunge in jet engine hours - and therefore also in maintenance bills.

UK Prime Minister Boris Johnson is speaking in parliament now (albeit via video link because of self-isolation rules) ahead of the spending review by his chancellor, Rishi Sunak.

Johnson said the government had been able to provide funding during the pandemic “because we have a government that understands how to run a strong economy and makes sure it takes the tough decisions now that will allow our economy to bounce back”.

This blog will be mainly sticking with corporate news, financial markets and economics from around the world for the next few hours, but you can follow the spending review in detail on our politics live blog:

And it’s Jasper Jolly here, taking over from Graeme Wearden, who will be covering the spending review.

Gold, that traditional safe-haven asset, is inching up from yesterday’s four-month low....

Copper prices have hit their highest level in nearly seven years today, on anticipation of higher demand as the global economy recovers from the pandemic.

With China’s exports growing as its economy strengthens, and president-elect Biden likely to push for more stimulus, commodities could be boosted by higher infrastructure spending.

Metal Bulletin.com has the details:

Copper’s three-month price reached a near seven-year high during morning trading on the London Metal Exchange on Wednesday, boosted by bullish macroeconomic trends, while other base metals showed a mix of small rises and falls.

The red metal rose to $7,360 per tonne in morning trading, surpassing a price last seen in January 2014, before easing back to $7,287 per tonne by 9:10am, a slight dip from its Tuesday closing price.

Netflix will boost its spend on making TV shows in the UK to $1bn (£750m) this year as the streaming giant maintains the breakneck pace of its production pipeline despite the coronavirus pandemic, my colleague Mark Sweney reports.

Netflix, which makes shows such as The Crown and Sex Education in the UK, has increased its budget by 50% from the £500m it spent on British-made films and TV shows last year. Netflix UK had originally estimated a spend of about £400m last year, but ended up investing about £100m more.

The BBC’s total annual content budget across TV, radio and online hit £2.3bn in the year to the end of March. Within this, spend on TV content was £1.6bn. ITV spends about £1.1bn annually on content for its portfolio of channels.

Here’s the full story:

Most European stock indices have now dropped into the red, as the markets take a breather after yesterday’s surge.

The Europe-wide Stoxx 600 is down 0.4%, with cyclical stocks such as banks, miners and consumer-focused firms leading the fallers.

Naeem Aslam of AvaTrade suggests markets may have got ahead of themselves this month, given the tough times ahead:

Investors know that in the medium term there are still vast challenges and issues which needs serious attention. Yes, the presence of vaccine has answered many questions and we are in a much better situation today as compares to the beginning of this year. But, this does not change the fact that it is going to fair amount of time before things get back on track.

This means that optimism spurred by vaccine and political development may be a little too much and the reality is that the recovery path is still full with obstacles.

Future, Britain’s biggest magazines publisher, has swooped on price comparison site GoCompare this morning, in a £594m takeover deal.

My colleague Mark Sweney explains:

The deal to buy GoCompare, known for its adverts featuring the opera singer character Gio Compario, means another huge windfall for GoCompare’s non-executive chairman, Sir Peter Wood.

Wood, GoCompare’s largest shareholder, holds a 29.65% stake in the business, worth almost £180m under the terms of the deal. He had already made a near-£800m fortune from insurance after founding Direct Line and Esure, which owns the women’s car insurance brand Sheila’s Wheels. GoCompare was spun out of Esure in 2016.

The move marks a further drive into digital for Future, which is the UK’s biggest magazine publisher, with titles including Country Life and Metal Hammer, and has a market value of £1.9bn. It already makes significant online income by referring readers to retail partner websites to make purchases.

GoCo Group’s board has unanimously recommended that shareholders vote in favour of the deal. More here:

After a bright start, Europe’s rally is now faltering.

The FTSE 100 has shed those early gains, now down 22 points or 0.35% at 6410 - away from its five-month high.

Jet engine maker and servicer Rolls-Royce is among the fallers, down 4.2%.

Financial stocks are down too, with Lloyds off 4.5% and Barclays losing 4%.

Property developers, who would also benefit from a return to more normal economic conditions, are also under pressures, with Land Securities down 3.2%.

Among smaller companies on the FTSE 250, holidaymaker TUI has dropped by 7%, handing back some of yesterday’s big gains.

Germany’s DAX has dipped into the red too, down 0.2%.

This still leaves the FTSE 100 up 15% this month (and down 15% for the year), as markets catch their breath after a rumbustious November.

Neil Wilson of Markets.com sums up the mood:

The mood in global markets has been lifted by a combination of three doses of very encouraging vaccine news, the US election finally being ‘settled’, and I think it’s worth noting the appointment of Janet Yellen to the US Treasury.

She’s someone who, as Fed chair, repeatedly called on Treasury to do more and is viewed as a dove in relation to the deficit.

Her first task won’t be made any easier after incumbent Steve Mnuchin moved to tied up $55bn in unspent Cares Act funding in a pot that will require Congressional approval to spend.

Wall Street has now moved into ‘extreme greed’ mode, according to CNN’s tracker of investor emotions.

Following November’s market surge, the index has moved to 88 points -- where 0 is maximum fearfulness and 100 is maximum greed.

It is based on various measures including stock price momentum (how far the S&P 500 has shifted from its 125-day moving average), price strength (how many stocks are at yearly highs or lows), and the ratio of bullish call options to bearish put options being taken out.

With the Dow and the S&P 500 hitting record highs last night, the index is now back at its levels in early 2020.

Recent good news on vaccine trials, and the easing of political uncertainty in the US, may mean investors are right to be optimistic. The outlook does look much more positive than a month ago.

But as fund manager Alberto Gallo tweets, you also need to be selective about where to invest:

A Reuters poll of fund managers, strategists and brokers has found that more than half expect the current market rally to last at least another 12 months.

Around 31% reckon the rally will last at least two years, with 23% seeing an end within two years.

Another 21% predicted the run-up in global stocks would end within the next year, while 10% thought it would end in six months, and 12% within the next quarter. More pessimistically, 3% reckoned it was already ending, though.

Reuters explains:

The blistering rally in global stock markets is set to continue for at least six months, albeit at a shallower pace, amid hopes more cheap cash and a COVID-19 vaccine allow economies to heal and corporate earnings to recover, Reuters polls of market experts found.

Reuters has polled around 170 strategists, brokers and fund managers around the world for their forecasts covering 17 major stock indexes, the first survey since stock markets across the globe rallied following breakthroughs in vaccines for the COVID-19 virus.

The poll also predicted that European stocks will return to their pre-crisis peak by the end of 2021, as corporate confidence and profitability recover.

Engineering firm Melrose is the top riser on the FTSE 100, up 3.4%, after reporting that trading is currently “at the top end” of its expectations.

Its aerospace division has been badly hit by the pandemic, with sales down 37% year-on-year in the four months from 1 July 2020 to 31 October 2020.

But its automotive arm, which produces driveline technologies, and its powder metallurgy businesses saw trading improve, with automotive revenue down just 3% and powder metallurgy 7% lower year-on-year.

The company told shareholders:

Melrose is currently trading at the top end of the Board’s expectations for 2020. Your Board is encouraged by this, but clearly given the global uncertainty caution is required on any predictions for next year.

The performance of the Group in the Period reflected the faster than expected recovery in automotive markets, first seen over the summer, the continued strong performance in Nortek Air Management, and the more challenging, although currently stable, market conditions in Aerospace.

The UK’s FTSE 100 has risen to a new five-month intraday high, as European stock markets add to yesterday’s gains.

The blue-chip index has gained another 35 points, or 0.55%, to 6468 points - its highest level since early June.

Germany’s DAX index has gained 0.17%, with France’s CAC up 0.3%, as traders take their cue from last night’s rally on Wall Street.

Richard Hunter, head of markets at interactive investor, says:

“Any concerns on the timing of a vaccine roll-out were swept aside as both the Dow Jones and the S&P500 surged to record highs.

Despite the level of Covid-19 cases remaining uncomfortably elevated and with unemployment still an unsolved problem in the background, US investors are currently positioning for the post-pandemic environment.

In addition, markets were buoyed by the news that the Biden transition to the White House has now formally begun, thus removing a level of uncertainty around a contested election result. Reports that the highly respected former Federal Reserve Chair Janet Yellen could be in line for an appointment as Treasury Secretary was also well received.

The FTSE100 has been a partial recipient of the improving anticipation for a global recovery, helped by the recent rally in the oil price from a previous low of around $20, to $48.

The price still remains down by 28% in the year to date, but hopes of renewed demand following the successful distribution of a vaccine has resulted in a recently strong performance for the likes of the airline stocks and, of course, the oil majors.