Global stock markets are driving Biden’s $ 6 trillion budget proposal

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US President Joe Biden. Photo: Nicholas Kamm / AFP via Getty Images

Stock markets rose on Friday as investors watched the release of President Joe Biden’s spending plans, which are reported to be on the order of $ 6 trillion (£ 4 trillion) for the coming fiscal year.

According to the New York Times, this is expected to rise to $ 8.2 trillion by 2031.

Citing documents received, the newspaper said the Democratic president plans to fund his agenda through higher taxes on businesses and high earners, with the budget deficit expected to decline in the 2030s.

“$ 6 trillion budget plans will have many winners, although it makes sense to be cautious about each of today’s announcements,” said IG market analyst Joshua Mahony.

“While Biden enjoys a slim majority in Congress, the ability to get his original plan on track is in doubt. So while the markets are likely to enjoy an upbeat end of the week, it might only be a matter of time before we see a high dose “the reality of how much of that $ 6 trillion will see the light of day.”

The news held markets in positive territory as traders awaited the announcement as European stocks hit all-time highs on Friday.

The Europe-wide Stoxx 600 index (^ STOXX) rose by more than 0.6% to a new record during the day. This year it has increased by over 12% so far. Each sector rose, led by financials, industrials and utilities.

The Stoxx 600 hit a record high on Friday.  Chart: Yahoo <a class=Finance” src=”https://s.yimg.com/ny/api/res/1.2/afE11kzNmhnHudD4PaM3Ag–/YXBwaWQ9aGlnaGxhbmRlcjt3PTk2MA–/https://s.yimg.com/os/creatr-uploaded-images/2021-05/8c1d15f0-bf99-11eb-a9fd-8c69814e3d69″/>

The Stoxx 600 hit a record high on Friday. Chart: Yahoo Finance

It came when eurozone economic confidence hit a three-year high across the eurozone. It was lifted by a surge in sentiment among service companies, retailers and consumers as COVID-19 restrictions ease.

The European Commission’s Economic Sentiment Index rose from 110.5 points in April to 114.5 points in May, higher than expected and close to its high in December 2017.

The FTSE 100 (^ FTSE) closed unchanged as UK business confidence also hit a five-year high.

The Lloyds Bank Business Barometer shows that more companies in the UK are more optimistic about the economy than at any time since 2016.

Optimism rose five percentage points this month to 37%, a level last seen before the Brexit referendum. It was favored by companies that wanted to hire more staff and also expected higher wage and price increases.

The survey, carried out between May 4 and May 18, also showed that manufacturing companies, up 13 percentage points from the previous month and the highest of all sectors, had better economic prospects.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said the fourth monthly surge in business confidence “gives us hope for the UK’s economic recovery”.

Elsewhere in Europe is the French CAC (^ FCHI) rose by 0.8% and the DAX (^ GDAXI) was 0.7% higher in Germany.

Watch: The UK economy contracts in the first quarter but bounces back in March

On the other side of the pond is the S&P 500 (^ GSPC) rose 0.3% and the tech-heavy Nasdaq (^ IXIC) was 0.5% higher. The Dow Jones (^ DJI) gained 0.3% at the close of the European market.

It also followed an important measure of US inflation, which reached its highest level since the early 1990s, when price pressures built up amid the economic recovery. The core index of personal consumption expenditure (PCE) rose 3.1% year over year in April, the Department of Commerce reports.

While US inflation rose sharply in April, private incomes fell by just over 13% during the month.

On Thursday, unemployment claims fell again to their lowest level since March last year, while the annualized economic growth rate was 6.4%.

Continue reading: Unemployment Claims: Initial registrations fell for a fourth straight week to mark a new low in the pandemic era

“Further signs of the US economy starting to heat up prompted another move to value stocks at the expense of growth,” said Richard Hunter, head of markets at Interactive Investor.

“The coming weeks will provide more clues as to whether inflation is stabilizing or whether it is actually temporary, as the Fed insists. This will bring the likelihood of both market volatility and investor sentiment rising and falling if the real picture emerges. “

Asian stocks were mixed overnight, with MSCI’s broadest index for Asia-Pacific stocks outside of Japan adding small gains.

The export-sensitive Nikkei (^ N225) rose 2.1% in Japan despite the country extending its state of emergency, while the Hang Seng (^ HSI) almost 0.1% higher and the Shanghai Composite (000001.SS) decreased by 0.2%.

“Given its sensitivity to economic fluctuations, commodity prices and world trade, Asia’s financial markets could arguably benefit most from a large US financial package,” said Kyle Rodda of IG.

“So much seemed to be manifesting itself in the region’s equity markets today: Asian benchmark indices generally rallied solidly towards the end of the month – with the notable exception of Chinese stocks, which traded flat – as markets saw the possibility of another pump -Exclude priming. “Of global growth through the USA.”

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