Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Global stocks markets continue to push higher, after the US House of Representatives passed Joe Biden’s landmark $1.9trn stimulus package.
The bill, which should be signed tomorrow, aims to stimulate its recovery and lift millions of Americans out of poverty. It could also give the global economy a significant boost.
Biden’s 628-page bill, named the American Rescue Plan, includes provide direct payments of up to $1,400 to most Americans, extends the $300-per-month supplemental unemployment benefits, and direct tens of billions of dollars to expand Covid-19 testing and vaccine distribution.
Jim Reid of Deutsche Bank says:
The direct payments of $1400 to a majority of Americans will be sent out within days of the President’s signature, while the $300/week supplemental unemployment benefits will now be extended to September with no lapse.
Treasury Secretary Yellen was out selling the package, anticipating that the legislation could allow the labour market to recover to full employment by the end of 2022.
Last night the Dow Jones Industrial Average closed at a new record high, also helped by a benign US inflation report.
Overnight, Asia-Pacific stocks have rebounded strongly, with China’s CSI 300 up 2% and Japan’s Nikkei up 0.6%.
The US stimulus package has been widely expected, but confirmation that it has been approved seems to have reassured traders.
David Madden of CMC Markets:
Several hours after the end of European trading, it was announced that Congress backed the $1.9 trillion stimulus plan so it will be passed over to President Biden to sign off. The Dow Jones hit another record high, it closed above 32,000, following the announcement of the relief package.
The bullish sentiment from the US pushed up equity markets in the Far East, in addition to that, European stocks are poised for a positive start.
The UK’s FTSE 100 being called up 0.3%.
The European Central Bank meets to set monetary policy across the eurozone today, as the slow vaccine rollout programme fuels concerns that its recovery is falling behind.
European Central Bank officials will have to decide at their meeting today whether rising government-bond yields across the globe threaten the region’s virus-stricken economy
The ECB will also release its latest economic forecasts, and it emerged yesterday that they’ll take a cautious view about inflation prospects. According to ECB insiders, the new macroeconomic projections will predict that Europeans won’t blow their hoarded savings in a sudden consumption boom when lockdown restrictions ease.
Analysts aren’t expecting any policy changes from the ECB, which will also be pondering the recent rise in eurozone government bond yields.
Naeem Aslam of AvaTrade says:
Today’s most important event is the European Central Bank’s meeting and its decision on monetary policy. No drama is expected as the ECB isn’t anticipated to change its monetary policy’s sailing path. It is highly likely that we may hear the echo of the same message that we had in the RBA and BOC’s monetary policy meetings, and that is: the ECB is likely to play down any qualms around inflation.
The message is likely to say that any surge in inflation is most likely to be temporary, and market players should not expect any change in the monetary policy.
- 12.45pm GMT: European Central Bank interest rate decision
- 1.30pm GMT: ECB president Christine Lagarde holds news conference
- 1.30pm GMT: US weekly jobless figures