A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.
Wall Street will be laser-focused on the political arena this week as divides threaten to delay or derail efforts to steer trillions of dollars in fresh stimulus to needy workers and businesses in Europe and the United States.
What’s happening: Talks in Brussels over a €750 billion ($859 billion) relief package stretched into their fourth day on Monday as frugal Northern countries stood firm on limiting the proportion of grants in the mix, as opposed to loans. The conditions that would be attached to funding also remain a point of contention.
But a compromise could be close. Before the EU summit was adjourned after all-night talks Sunday, a deal was proposed that would reduce the proportion of grants to about 50% of the fund, or €375 billion ($429 billion).
“We are not there yet,” Dutch Prime Minister Mark Rutte said. “Things could still fall apart but it looks a bit more hopeful than at times last night.”
That’s good news considering the euro is rising on the assumption that a deal will be reached. The currency climbed to $1.15 on Monday, its highest level against the dollar since early 2019.
That’s not all: Stimulus negotiations will kick off in Washington “in earnest” on Monday, according to White House chief of staff Mark Meadows. Senate Majority Leader Mitch McConnell and House Minority Leader Kevin McCarthy are due to meet with President Donald Trump and Treasury Secretary Steven Mnuchin to “fine tune” the proposal, Meadows said.
Much remains up in the air — and it’s not just liberal and conservative lawmakers who are facing off. The White House and Senate Republicans are at odds over the amount of funding that should be given to the US Centers for Disease Control and Prevention, a source with direct knowledge of the matter told CNN over the weekend.
The stakes: An explosion of coronavirus cases in Sun Belt states has threatened the fragile US recovery, raising pressure on lawmakers to agree on the next round of assistance quickly. Goldman Sachs said in a note to clients that consumer spending could fall back to June levels if other states with growing case loads follow California in reimposing strict social distancing.
The bank said that if the recovery stalls or reverses this quarter, growth would likely be stronger than expected in 2021. But it could also result in long-term scarring of the economy.
“This could come in the form of permanent business closures or — with the labor market recovery now stalling, led by setbacks in the Sun Belt — lost opportunities to quickly rehire workers still on temporary layoff,” strategists led by chief economist Jan Hatzius wrote in Sunday’s note.
On the radar: As the job market sags, lawmakers need to decide whether to extend a $600 per week federal lifeline for millions of unemployed Americans.
Though the supplementary relief technically doesn’t expire until July 31, this will be the last week for which benefits are paid. If a consensus isn’t reached, more than 25 million people will be thousands of dollars poorer each month, my CNN Business colleague Tami Luhby reports.
Investors are feeling good about the vaccine timeline
Investors are increasingly bullish about the timeline for a Covid-19 vaccine as governments rack up advance orders and data from clinical trials continues to come in.
The latest: A Deutsche Bank survey of 500 market professionals released Monday shows growing optimism, with 56% of respondents expecting a vaccine within the next 12 months. That’s up from 37% in June.
The positive outlook comes as drugmakers release results from clinical studies that could be promising, sparking sharp run-ups in shares.
See here: AstraZeneca (AZN) and Oxford University are due to release early data from human trials on Monday in The Lancet medical journal.
The company has already signed agreements with countries around the world to supply hundreds of millions of doses if its vaccine is found to be both safe and effective. AstraZeneca’s stock has rallied nearly 24% this year, and gained another 4% Monday in London.
A possible vaccine developed by Pfizer and Germany’s BioNTech (BNTX) is also garnering interest after the US Food and Drug Administration gave “fast track” designations to two of their four vaccine candidates last week, lining them up for accelerated approval. The United Kingdom on Monday said it had secured 30 million doses of the vaccine candidate, as well as up to 100 million doses from French pharma company Valneva.
Pfizer’s shares rose more than 7% last week, while BioNTech’s shot up 21%. Valneva shares rose 10% in Paris on Monday.
Some moves tied to Covid-19 drugs are even more dramatic. Stock in Synairgen, a British biotech firm, leaped 451% in London on Monday after the company said that a trial of its coronavirus treatment reduced the number of patients who needed to be put on ventilators. Its shares have skyrocketed more than 2,794% year-to-date.
Why Silicon Valley’s biggest companies are betting on India
Silicon Valley’s top names are investing massive sums of money in India, a crucial growth market that is also of increasing strategic importance.
Since the start of 2020, the biggest names in US tech have invested around $17 billion in the country, my CNN Business colleague Rishi Iyengar reports.
See here: Amazon pledged $1 billion in January, Facebook invested nearly $6 billion in late April and Google topped them all last week with a $10 billion commitment. They’re part of a wave of investment in India’s tech industry this year that’s now well over $20 billion, with most of it coming from the United States.
The flood of investment highlights something that’s been true for years: India’s digital economy, with more than 700 million internet users and roughly half a billion yet to come online, is simply too big a prize for Big Tech to ignore.
But geopolitics could be playing a role, too. India’s diplomatic spat with China has spilled over into tech, aligning it with the Trump administration’s own distrust of Chinese companies. The diminishing scope for tech cooperation with China, along with new threats to footholds in places like Hong Kong, have made a presence in India even more crucial.
“China, through recent actions, has effectively delivered the US to India for a generation,” said Ravi Shankar Chaturvedi, research director at Tufts University’s Institute for Business in the Global Context.
Up next
Halliburton (HAL) reports results before US markets open. IBM (IBM) follows after the close.
Coming tomorrow: Investors turn to earnings from Coca-Cola (KO), Novartis (NVS), Snap (SNAP) and Texas Instruments (TXN).
