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Weekly financial market overview 22.03.-28.03.

News - March 29, 2021

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Konstantins Goluzins, CFA



Head of Asset Management
Phone.: (+371) 6700 0456
E-mail: trust@bib.eu

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Main events of the previous week

US President Joe Biden's team is developing a new package of measures to support the economy, reduce harmful emissions and reduce economic inequality in the amount of $3 trillion. New measures have been discussed for several months and this week the head of the White House will present the first part of them at his speech in Pittsburgh. Biden's advisers recommend breaking the package of new measures into two parts to make it more appealing to push it through Congress. The first part of the measures will concern the development of infrastructure, including clean energy and other fast-growing industries of the future, such as communication technology 5G. It will also include the introduction of broadband in rural areas, training of millions of workers, the construction of a million affordable and energy-efficient residential buildings. It follows from the documents that almost $1 trillion is planned to be spent on the construction of roads, bridges, railways, ports, charging stations for electric vehicles and improving power grids. The second part of the package will affect the development of human infrastructure - students, workers and the unemployed. It provides for the allocation of significant funds for education and programs aimed, among other things, at increasing the employment of women and helping them to combine work and childcare. The package will extend or permanently expand subsidies for low- and middle-income Americans to purchase health insurance and tax credits aimed at reducing poverty. Part of the costs under the new package could be covered by higher taxes for corporations, including an increase in the corporate income tax rate from the current 21% and measures to force multinational corporations to pay taxes in the United States on income they receive abroad. Earlier, on March 11, Biden signed a package of measures to help the economy and the Americans in the amount of $1.9 trillion. It includes, among other things, direct payments to most Americans in the amount of $1,400, the allocation of $25 billion to support the business in utilities and rent payments, and about $10 billion to help mortgage borrowers.

Economic data

Eurozone. According to the preliminary assessment of the PMI business activity index in March, the index increased by 3.7 points and amounted to 52.5. Of the indicators that make up the index, business activity in the service sector was 3.1 points higher, while the state of the manufacturing sector rose 4.5 points.

US. According to the preliminary assessment of the PMI business activity index in March, the indicator decreased by 0.4 points and amounted to 59.1. Of the indicators that make up the index, business activity in the service sector was 0.2 points higher, and the state of the manufacturing sector increased by 0.4 points.

The volume of orders for durable goods in February decreased by 1.1% versus the previous month. The fall in the base indicator, which does not include civil aviation, was 0.9%.

The number of initial jobless claims for the week was registered in the amount of 684 thousand, which is 97 thousand less than the previous week and 46 thousand less than predicted by analysts.

In February, the level of personal income, as expected, decreased by 7.1% mom, while in January incomes showed an increase of 10.1%. The level of personal spending in February fell by 1% mom, after growing by 3.4% in January.

Key events this week

  • On Wednesday, the rise in prices for March will become known in the Eurozone, the US will report on changes in oil reserves, and in China, the level of business activity in the industrial sector will become known.
  • On Thursday, the US will publish the number of initial jobless claims for the week.
  • On Friday, the US will report on the state of the labor market in March.

The information provided herewith has an informative nature. This information cannot be regarded as an offer or recommendation for purchase, storage or sale of securities, or as an investment recommendation, an investment survey or a consultation on investments, or a recommendation to entrust management of your assets to the specific investment manager. The Client is fully aware and undertakes all risks involved in the investment. This information is prepared by AS Baltic International Bank.

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