As President Biden releases details of a 2 trillion-dollar infrastructure plan, US markets edge higher. It was surprising that it was mainly the Tech space that led the move last night. At this point, I’m not reading too much into that. Tech could still come under pressure if bond yields continue to rise. 2 Trillion was widely expected so Value stocks are not pushing up quickly here. Markets now need to mull over the tax increases that are going to be introduced to fund it.
At the end of the day, this is another 2 trillion that will hit the US economy, but this time it will be slower than sending out $1,400 checks. This will help the US economy recover over the years to come. Therefore help the market remain strong in the long term.
Bond yields continued to rise again and are now nearing yearly highs. Watch this space as it could see investors switch back out of Tech again if it rises strongly. A slow and steady rise will have less of an effect.
Locally our market is still lagging the US, we may need to see the SP500 break strongly into Blue skies to see us break out of the channel. At this point, we cannot see any reason for the US markets not to continue higher. But you never know what is around the corner.
The XJO is expected to open flat this morning, following a similar move in the U.S overnight. In addition, U.S futures sit flat, so we have little leads to go off and so our market may need to think for itself for a change.
Yesterday saw a strong move higher, and for a moment we looked like we were going to break the top of the channel at 6850. But alas, it was not meant to be as our market tumbled back down to give up most the gains and sit roughly in the middle of the channel.
Don’t expect too the market to finish too far from its open today as it is unlikely brave enough o make any headway going into a four-day weekend.
US shares traded slightly lower overnight, with shares opening lower and rising throughout the session. The key news was rising bond yields, with the US 10-year treasury reaching a 14-month high overnight. Investors are waiting for President Biden’s infrastructure stimulus bill announcement, which is scheduled for tonight.
In economic data, US consumer confidence for March came in much stronger than expected and showing an improvement on February’s sentiment. We also saw an oil inventory read that showed a bigger than expected build-up in US oil inventories. Some are now suggesting that the US will face another wave of deaths before the vaccines start reducing virus numbers significantly. Most major sectors closed lower to some degree, expect for Financials and Telecoms, who were slightly higher.