The stimulus package and market reaction | IFCM UAE
IFC Markets Online CFD Broker

The stimulus package and market reaction!

Biden finally could make it happen. Both Senate and House confirmed his 1.9T package, with the lowest possible changes. In last weeks market is worry about Bond's Yields, the passage of the latest U.S. stimulus added these fears once again. U.S. 10 Year Treasury Note at 1.627 testing its highest level since Feb. 2020. The good and bad signal at the same time. Good, because it shows the positive sentiment in the market and hoped for faster recovery; however, higher rates of bonds will end lift the borrowing rate, which can cause higher than expected inflation in the market, as well as more costs for long-term loans, which will affect the construction and housing market. After passing the bill, the week started with mixed Chinese data, caused Sell-off in China stocks and the US equity futures. The Shanghai Index closed 1% lower, while the US futures losing 0.1-0.4% in the Asian season.

Stock Markets.

Generally stimulating package must be positive for the stock market, even though the first hours' negative reaction. More support from micro-businesses in line with 1.4K cash checks will load the huge amount of cash into the market. Our experience from previous packages confirms that a big part of this cash will find a way to stock markets. Same reason why Bitcoin also printed new highs as soon as packages have been signed over the weekend because many new and retail investors found it more interested. However, it will affect differently for different groups. Energy and metal-based stocks will take advantage of that, while heavy tech stocks, while already have been printing new record highs during the pandemic, with more market positive reaction and opening, will be less used and interested for investors, at least in the short term and can create a buying opportunity for a bit longer-term investors.

IFCM Trading Academy - New era in Forex education
Pass Your Course:
  • Get Certificate
trading academy

Energy and Metals.

Metals depend on their usage, have different reactions. Industrial metals like Copper, Aluminum, Platinum, and even Silver can be lifted by motivated markets and higher productions in factories, as the demand curve is rising. On the other hand, Gold which has been rising throughout the epidemic and crisis as a Safe-Haven can be under pressure.

After vaccination progress and more stimulate package, openings will raise the demand, which means more need for production and more demand for energy. Oil, the most used energy, must get supported while the spring in the Northern Hemisphere is getting started. Traditionally Spring and Summer increase Oil demand as well.

Trade with a trusted and internationally recognized broker

15 Years Anniversary
Details
Author
Ahura Chalki
Publish date
28/11/23

Ready to start trading?

Corporate clients, for you here
Individual
Latin letters only
Close support
Call to Skype Call to WhatsApp Call to telegram Call Back Call to messenger