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US market: results of the presentation of Biden's industrial plan

23 / June / 21 Bunsi Shakiramal Visitors: 256 Rating: ★★★★★

Market the day before

Trading on March 31, American stock markets showed mixed dynamics. The S&P 500 rose 0.36% to 3909 points, the NASDAQ climbed 1.54%, the Dow Jones lost 0.26%. IT companies showed strong growth (+ 1.50%), recouping losses incurred earlier. The energy sector followed the decline in oil prices, sagging 0.93%. However, oil quotes are showing positive dynamics today ahead of the OPEC + meeting. 10-year Treasury yields are declining after rising to 1.74% the day before.

Company news

America's largest iron ore operator, Cleveland-Cliffs (NYSE: CLF: + 16.7%), has significantly raised its guidance for 2021. Strong first quarter results are expected.

BioNTech (NASDAQ: BNTX: + 4.6%) teamed up with Pfizer (NYSE: PFE) to announce effective vaccine testing in adolescents.

Romeo Power (NYSE: RMO: -19.7%), an electric vehicle battery maker, posted lower-than-expected Q4 2020 results and weak plans for 2021.

We expect

Today, world stock markets are showing predominantly positive dynamics. European markets are rising after the green session in Asia (excluding Nikkei 225), S&P 500 futures are at yesterday's level. The yield on the 10-year Treasury is falling after the record highs the day before.

Today, investors will focus on the OPEC + meeting, during which the cartel will decide on the volume of oil production in the coming months. Earlier, OPEC + representatives expressed concerns about demand. In addition, the worsening COVID-19 incidence in Europe calls into question the relevance of the supply increase.

On March 31, the first part of Biden's reform was announced: the White House tentatively proposed $ 2 trillion in infrastructure stimulus over a horizon of eight years, with a focus on modernizing transport links and utilities, electrification, improving supply chains, capital investment and creating new jobs. The program will be financed in part by raising taxes in the next 15 years: it is planned to increase the tax rate on corporate profits from 21 to 28% and revise the minimum allowable tax burden.

The proposed program is now subject to Democratic approval. In the near future, the focus of attention will be the announcement of the second part of the Biden plan, which may tentatively increase the total volume of the aid package to $ 4 trillion.

Asian stock exchanges showed positive dynamics. China's Shanghai Shenzhen CSI 300 gained 1.24%, Japan's Nikkei 225 rose 0.72%, and Hong Kong's Hang Seng climbed 1.97%. The European Euro Stoxx 50 is gaining 0.47%.

Risk appetite is growing. The 10-year Treasury rate drops to 1.71% after the record high the day before. Gold is trading at $ 1,719. Brent crude futures are holding near $ 64. Russel 2000 futures are up 1.13%.

We expect the S&P 500 to be upward today with a target of 4,000 points.

Economic news and macro statistics

April 1 will be published weekly data on the number of initial applications for unemployment benefits in the United States (forecast: 680 thousand against 684 thousand in the previous period). Also released is the index of business activity in the manufacturing sector (PMI) of the US from the Institute of Supply Management (ISM) for March (forecast: 61.3 versus 60.8 in February).

Sentiment Index

The Freedom Finance Sentiment Index drops to 65 out of 100, but still reflects market participants' hope for a global economic recovery in 2021. However, concerns about a new wave of COVID-19 in Europe, rising inflation and Treasury yields in the second half of spring have a negative impact on investor sentiment.

Technical epictur

Technically, the S&P 500 is still in an uptrend. The day before, the broad market index reached a new all-time high. The strength of the medium-term upward movement is gradually fading away, but the MACD indicator still indicates the preservation of the “bulls” advantage, so the movement to new highs may continue. At the same time, the “bearish” divergence on the RSI indicator persists, so we recommend that you exercise caution.

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