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23 Dec 2020
3 min read

$900bn Stimulus Bill Rejected by Trump, Stock Futures Dip

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Written by OspreyFX News Team

$900bn Stimulus Bill Rejected by Trump, Stock Futures Dip

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Key Takeaways
  • Risk-off approach dominates the market
  • Deal with Pfizer in the pipeline

US equity futures declined before the opening of the European session on Wednesday after President Donald Trump said the coronavirus relief package that was passed earlier this week was a “disgrace”. A day after the $900bn relief bill was approved by Congress, Mr. Trump has rejected the bipartisan legislation while urging lawmakers to amend key elements in it. The bill, spanning nearly 5,600 pages, was passed on Monday and had to be sent to the White House to be signed by President Trump.

The relief package intended to bolster the US economy includes nearly $300bn for small business funding and $600 relief payments for American adults. The stimulus aid also includes an extension of unemployment insurance, $300 per week for 11 weeks.

“The bill they are now planning to send back to my desk is much different than anticipated. It is a disgrace” Mr. Trump said in a four-minute video on Twitter on Tuesday evening. President Trump asked Congress to “amend” the relief bill while he also called for an increase of the “ridiculously low” $600 direct payments to $2,000 per person or $4,000 per couple.

As a result, investors took on a risk-off approach to the market on Wednesday due to the possible stimulus delay. With Mr. Trump’s unwillingness to sign the bill as it is, it is not clear how long it will take before the bill is amended and the spending package is enacted. On Monday, before the President blocked the legislation, Treasury Secretary Steven Mnuchin expressed confidence that the $600 direct payments to Americans could be distributed before the end of the year. Mr. Mnuchin said on Twitter earlier on Tuesday that he was “pleased” with the stimulus bill that would bring “critical economic relief for American workers, families, and businesses”.

“Send me a suitable bill or else the next administration will have to deliver a Covid relief package. And maybe that administration will be me, and we will get it done.”, said Mr. Trump, as he also demanded lawmakers to remove “wasteful and unnecessary” items.

In response to Mr. Trump’s announcement, Nancy Pelosi, the Democratic speaker of the House of Representatives took to Twitter and said that “Democrats are ready to bring this to the floor this week by unanimous consent”, indicating support for Trump’s proposal for $2,000 checks.

The market also continues to weigh the vaccine rollout as the new coronavirus strain is causing a new wave of harsher lockdowns. At one point earlier, Dow futures slipped over 110 points, while S&P500 futures and Nasdaq futures lost about 0.5% at their low points in the pre-market hours on Wednesday. Futures have recovered and point to a flat opening in the early trading hours of the European session.

On Tuesday, the markets were mostly struggling for a direction as investors cheered the breakthrough over the stimulus bill while at the same time monitoring the Covid-19 pandemic situation across the globe. Earlier in the week, it became clear that the US could not keep up with the vaccination plans as officials have previously expected to have at least 20 million people vaccinated before the end of the year. The process is taking more time than anticipated. Additionally, the US is close to a deal with Pfizer to buy tens of millions of doses, easing the path to mass vaccination.