And finally, here’s our report on today’s stock market rally in London.

Goodnight. GW

Back in New York, shares have dipped into the red after Senate Majority Leader Mitch McConnell blocked an attempt to increase the direct payments in the US coronavirus relief bill to $2,000, from $600.

McConnell rejected a Senate Democrat request to pass a bill boosting the stimulus checks by ‘unanimous consent’, despite vocal demands from Donald Trump.

Instead, he said the Republican-controlled Senate would address the issue later this week (reminder, the Democrat-controlled House of Representatives passed this bill yesterday, and sent it up to the Senate).

Trump’s demand for larger stimulus checks is putting more pressure on Republicans in the Senate, particularly McConnell, as CNBC explains:

The Kentucky Republican faces pressure to act after the House — with nearly all Democrats and a few dozen Republicans on board — voted Monday to boost the cash deposits to $2,000 from $600. Now, Senate Republicans wary of spending more on pandemic aid have to decide how to handle a vote on a bill backed by President Donald Trump and Democrats as they try to hold on to their majority.

McConnell brought the chamber back this week with one major goal: overriding Trump’s veto of the annual National Defense Authorization Act. He has not yet committed to bringing the $2,000 payment bill up for a vote, and it is unclear now how one would take shape.

Still, Democrats tried to use the limited tools at their disposal to force a vote. Speaking on the Senate floor Tuesday afternoon, McConnell said he planned to set up a Wednesday vote on the veto override.

This has pulled the main indices a little lower on Wall Street, with the Dow now down 73 points or 0.25% at 30,330 points, having hit new record highs this morning.

There’s no Brexit cheer in the UK performing arts sector, though.

Actors, musicians and comedians are alarmed that provisions in the Brexit trade deal will prevent British performers moving around many European countries without a work permit. Here’s the story:

Reuters’ reports that ‘Brexit trade deal cheer’ lifted shares in the City today:

Britain’s blue-chip FTSE 100 index ended at its highest since March on Tuesday as investors returned from a long weekend to cheer a post-Brexit trade deal that averted a chaotic exit from the European Union.

“The deal should see sentiment towards the FTSE indices recover just as the dividend payout ratio improves, vaccines are rolled out and overseas revenues accelerate. We lift UK equities to Bullish,” analysts at brokerage Jefferies wrote in a note.

The domestically-focused FTSE 250 index of medium-sized companies also rallied today, ending 1.7% higher at 20,897 points, a new 10-month high.

European stock markets closed at their highest level since February too, with the rally in London helping to lift the Stoxx 600 by 0.75%.

The US stock market has opened at fresh record high, with the Dow Jones industrial average gaining 114 points or 0.4% to 30,518.

The broader S&P 500 index is up 0.3%, while the tech-focused Nasdaq gained another 0.2% extending yesterday’s gains after Donald Trump signed the $900bn coronavirus stimulus spending bill.

Reuters says:

Wall Street’s main indexes opened at record highs on Tuesday as bets that fiscal aid will speed up a vaccine-led recovery in the economy boosted sentiment in the final days of the year.

In the US, house prices have surged at the fastest rate in six years, as the pandemic drives families to look for larger houses.

The S&P CoreLogic Case-Shiller national home price index posted a 8.4% annual gain in October, up from 7% in September.

That’s the fastest rate since 2014, as low mortgage interest rates, a shortage of homes for sale and pent-up demand all drive prices higher.

Associated Press has more details:

The coronavirus outbreak has forced millions of Americans to work from home and it’s curtailed other activities like eating out, going to movies or visiting gyms. That’s leading more people to seek out homes with more room for a home office, a bigger kitchen, or space to work out.

“The data from the last several months are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes,” said Craig Lazzara, Managing Director at S&P Dow Jones Indices.

The UK stock market is holding onto its gains, with the FTSE 100 currently up 2.1% or 139 points at 6641 points.

The pound has risen back over $1.35 against the US dollar too, up half a cent today.

Richard Carter, head of fixed income research at Quilter Cheviot, says investors are relieved that a disorderly no-deal Brexit has been avoided.

“After four and a half years of Brexit back and forth, the news of a Christmas trade deal between the EU and UK has been understandably welcomed by investors. Markets were particularly concerned about a damaging No Deal outcome but the agreement means we can look forward to 2021 with a measure of optimism. UK stock markets have so far reacted positively and should be in a better position to attract flows from international investors as the fog of uncertainty clears.

Sterling is also continuing to trade near this year’s high against the US Dollar although the lack of a sharp move suggests a deal was largely priced-in already. The reaction in gilt markets has also been muted with the Bank of England expected to keep interest rates low for the foreseeable future.

But he also warns that there will be a ‘prolonged’ period of adjustment to the new reality:

“Of course, we should not kid ourselves that the deal is an improvement, from an economic perspective, on the UK’s membership of the single market. There will be more trade friction than before and there is precious little in the agreement on areas like financial services.

UK sovereignty has been reinforced but the economy still faces a prolonged period of adjustment to the new arrangements and there will no doubt be ‘bumps in the road’. However, as we move into the New Year, the focus of investors will likely now move back to issues such as the vaccine-led recovery from Covid and the impact of a new President in the White House.”

The oil price has also rallied today, with Brent crude up 1% at $51.37 per barrel.

That takes crude back towards the nine-month highs hit earlier this month.

Raffi Boyadjian of trading firm XM says risk appetite is running high again today, amid optimism of a vaccine-led recovery in 2021.

All three indices on Wall Street closed at all-time highs on Monday and e-mini futures are pointing to another record session today. The positive sentiment also prevailed in Asia where the Nikkei 225 index soared by 2.7% to close at its highest in three decades.

In Europe, most bourses were up only modestly on Tuesday after a strong session yesterday, with the exception of the FTSE 100, as London markets were closed. But London shares were more than catching up today as they surged by 2%.

After a tumultuous year, stocks look almost certain to end 2020 on a high as there is no sign that the global flood of fiscal and monetary stimulus is about to be scaled back. And with vaccine rollouts gathering pace, it is easy for investors to look past the daily grim headlines of record Covid infections and deaths.

Russ Mould, AJ Bell Investment Director, says the markets are giving a ‘mixed response’ to the Brexit deal:

“The FTSE 100 and FTSE 250 are both up nicely in the early exchanges and sterling is holding on to the $1.35 and €1.10 marks, so markets seem to be welcoming the Brexit deal that was announced on Christmas Eve,” says

“However, the agreement struck between London and Brussels is yet to win universal acclaim, even if that is the inevitable result of the compromises that the Prime Minister had to make to get the deal over the line before the end of the transition period and confirmation of the UK’s departure from the economic bloc.

Mould says that the free-trade deal should help to ‘unlock investment and employment decisions’ that have been on hold, while companies waited for clarity on Brexit.

But, the lack of information about access to European markets for UK financial services companies will worry the City, with Boris Johnson admitting that the deal “perhaps does not go as far as we would like”.

This, Mould adds, explains why bank stocks are dropping this morning even as the wider market rallies:

Multinationals, who are the likeliest beneficiaries of frictionless, tariff-free trade and overseas currency earners are generally leading the charge in the FTSE 100, including Intertek and Diageo. Yet the laggards are nearly all banks and providers of financial services, a trend which can also be seen in the FTSE 250 where asset managers and insurers such as Ninety One and Sabre are among the day’s losers.

“This suggests that nerves remain over what deal will be struck in 2021 when it comes to financial services and indeed services overall, which provides a far greater percentage of UK GDP (and the Government’s tax take) than fishing or manufacturing.

Manufacturers now know where they stand in terms of trade flows, customs declarations, logistics and the vexed issue of the level playing field and potential state-aid for overseas-based rivals. They could also benefit from a currency that remains depressed relative to where it was four-and-a-half years ago, as that could provide a competitive edge when it comes to pricing in international markets.

“Yet the lack of visibility on services could continue to nibble away at sentiment until a further agreement is reached, although this is not to say that Brexit will be the only factor at work when it comes to shaping near-term market sentiment.

Here’s some early reaction to today’s rally:

Germany’s stock market has hit a fresh record high in early trading, with the DAX index up another 0.7%.

That means the DAX is now up 4.8% this year (while the FTSE 100 is still down 12%).

Here’s Associated Press on Japan’s stock market hitting a 30-year peak today:

In Tokyo, the Nikkei 225 jumped 2.7% to 27,568.15, the first time it has traded above 27,000 since August 1990, according to FactSet. The market hit its all-time peak close of 38,915.87 on Dec. 29, 1989.

The benchmark was buoyed by strong gains in heavyweights like Mitsubishi Heavy Industries, which surged 4.6%, apparel maker Fast Retailing, also up 4.6%, and technology and energy company SoftBank, which gained 4.2%.

Other Asian shares were also mostly higher.

Hong Kong’s Hang Seng index rose 0.9% to 26,557.18. In South Korea, the Kospi edged 0.1% higher to 2,814.16. Australia’s S&P/ASX 200 climbed 0.5% to 6,700.30.

The Shanghai Composite index fell 0.3% to 3,386.57. Shares fell in Taiwan and Indonesia but rose in Malaysia and Singapore.

AP: Japan’s Nikkei at 30-year high after Trump OKs stimulus