Global stocks benefit from the Fed, Biden’s incentive

© Reuters. A man wearing a face mask is seen inside the Shanghai Stock Exchange building as a novel coronavirus outbreak strikes the country in Shanghai’s Pudong financial district

By Tom Arnold and Kane Wu

LONDON / HONG KONG (Reuters) – Global stocks expanded their gains on Thursday after the Federal Reserve said it was too early to consider withdrawing emergency aid to the economy and U.S. President Joe Biden proposed a stimulus package $ 1.8 trillion.

The MSCI World Equity Index, which tracks stocks in 49 countries, rose 0.2% on its way to its best month since November.

The pan-European market opened 0.4% firmer, while e-mini futures for the 0.4% gain and Nasdaq futures rose 0.6%.

US Treasury bond yields rose 1.8 basis points to 1.6486, still below Wednesday’s two-week high, while Eurozone Treasury bond yields stayed below the two-month high.

Fed chairman Jerome Powell said Wednesday that “the time is not yet” to discuss a change in policy after the US Federal Reserve left interest rates and its bond purchase program unchanged despite the economic recovery in the US Country judged more optimistically.

The Fed’s stance, strong US corporate earnings and the notion that Biden is a big part of infrastructure have helped the markets, said François Savary, chief investment officer at Swiss wealth manager Prime Partners.

“The Fed confirmed the roadmap for any policy change, which is a comforting factor,” he said. “It looks like the rejuvenation won’t happen until 2022. This has weakened the dollar, supports market liquidity and means less pressure on emerging markets.”

HUGE STIMULUS

Biden proposed the sweeping new $ 1.8 trillion plan in a speech to a joint congressional session on Wednesday, asking Republican lawmakers to work with him on issues and face fierce competition from China.

He also made a passionate plea for taxing corporations and wealthy Americans to pay for what he called the American Families Plan in his maiden address to Congress.

He has also proposed almost doubling the capital gains tax, which rocked stock markets last week.

Stephen Dover (NYSE :), Franklin Templeton’s lead market strategist in California, said the tax package’s impact on markets is difficult to measure right now.

“When it’s over, I think it will affect individual stocks that pay a higher tax rate or companies with founders that might pay capital gains and sell stocks,” he said.

MSCI’s broadest index for stocks in the Asia-Pacific region outside of Japan built on early gains and gained 0.48%.

Australia rose 0.25% as strong oil prices lifted energy values ​​and closed at their highest level in nearly 14 months.

China’s blue-chip CSI300 index was up 0.88%.

The markets in Japan were closed for a holiday, but futures were up 0.48%.

For the rest of the day, investors will focus on the first estimate of US GDP for the first quarter, which is expected at 1:30 p.m. GMT.

DOLLARS IN DOLDRUMS

The Fed’s persistently cautious outlook and White House spending plans hampered the dollar, which traded just below the nine-week lows.

Against a basket of currencies, the greenback was at 90.622, a long way from the rally high of 93.439 at the end of March.

The euro hit its highest level since late February at $ 1.2150 before hovering at $ 1.2121.

Oil prices expanded their gains on Thursday as bullish projections for demand recovery this summer offset concerns over rising COVID-19 cases in India, Japan and Brazil.

June crude oil rose 0.39% to $ 67.53 per barrel, while US West Texas Intermediate crude oil price was $ 64.06 per barrel for June, an increase of 0.31%.

added 0.1% to $ 1,779.63 an ounce.

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