2021-06-25 16:37:37
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Summary
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U.S. president Joe Biden announced on June 24 local time that he had reached an infrastructure agreement with senators from both parties. Biden said both sides had made compromises in the hope of reaching a rare agreement. In the infrastructure plan unveiled by the White House on Thursday, "asset recovery" is just two terms near the bottom, but for many investment giants eager to see the word, it is gratifying. Although the bill is smaller than the original target of $1.2 trillion, it still marks great progress for the Biden administration in pushing forward broader proposals on a bipartisan basis. The US government is planning to provide an additional $4 trillion for "human infrastructure" in the future. The Dow Jones Industrial average continued its rally this week, with cyclical-linked industrial, financial and energy sectors doing well. Wall Street has high expectations for Biden's infrastructure plan, which is good for risk sentiment, and risky assets such as U. S. stocks are expected to get a boost.
Meanwhile, data on durable goods orders and weekly jobless claims released yesterday were slightly lower than expected, easing concerns about the Fed's curtailment of stimulus measures. About 410000 people applied for unemployment benefits last week, compared with an expected 380000. The monthly rate of orders for durable goods rose 2.3 per cent in May, compared with a benchmark forecast of 2.8 per cent. Us GDP grew by 6.4% in the first quarter and is expected to grow even higher in the second quarter. The recovery in the labour market has been slower than expected, easing concerns about tapering as Fed officials monitor inflation and employment data to set monetary policy.
Looking ahead, the core US PCE price index and the University of Michigan consumer sentiment data will dominate Friday's financial agenda. The core PCE price index is expected to rise 3.4% in May from a year earlier, the highest level since 1992. A large positive deviation from the baseline forecast could reignite the fear of shrinking stimulus and increase the strength of the dollar, while negative deviations could lead to the opposite.
The Asia-Pacific market looks set to rise first at the end of the week. Stock index futures in Japan, Chinese mainland, Australia, Hong Kong, South Korea, Taiwan and India are green, while Malaysia and Thailand are red.
Japan's Nikkei 225 index opened up 0.8%, led by materials, information technology and industrial sectors. Japan has lifted emergency measures in Tokyo and Osaka this week. Easing Covid-19-related restrictions could pave the way for the index to look higher, while a resilient yen could limit the upward potential of stocks.
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