On the first day of April the economic calendar is quite busy. Japan published its Tankan indices for the first quarter of 2021, which were mostly positive (only the manufacturing outlook was the exact same as the forecast).
Australia disappointed investors with its February balance of trade and failed to impress with its data on home loans and retail sales.
A number of European countries presented their manufacturing PMIs for March, which were mostly where investors expected to find them. Spain was the only country with a report exceeding the forecast, with the eurozone-wide PMI also being more positive than anticipated. The UK manufacturing PMI indicated faster growth as well.
Later today we expect jobless claims data from the United States, as well as its own manufacturing PMI report.
President Joe Biden’s latest spending plan is in and the markets will continue to react to it today. The President intends to raise $2.25 trillion to spend on infrastructure and help the United States transition away from its dependence on fossil fuels towards more sustainable energy sources.
Tax reform will be essential to Biden’s plans. The President has proposed increasing the corporate tax on the international income of US companies from 10% to 21% and hiking a few other corporate taxes. The proposed tax changes will affect US tech giants the most, so investors need to watch out how the likes of Facebook, Google, Apple, and Amazon will respond.
Due to the large amount of stimulus such a bill could bring to the economy, the US dollar softened today and Treasury yields declined, taking a respite from the aggressive reflation trends of the past weeks.
The shift away from reflationary trading has helped boost tech stocks and US stock indices in general, so today we expect gains on the stock market. One name to keep an eye on today is Microsoft, which landed a multi-billion dollar contract with the United States Army to provide AR equipment.
Another company that is attracting the attention of investors today is Taiwan Semiconductor Manufacturing, which announced it will dedicate $100 billion to expand its facilities in order to cater to the rising demand and lower supply of semiconductors, an issue that has been plaguing the tech sector since the start of the pandemic.
Last but not least, today we will hear OPEC+’s final decision regarding output quotas for the next month. The options of the cartel are to either keep production at the current levels or allow a modest increase of 500,000 barrels per day in May.
Many within OPEC, including de facto leader Saudi Arabia, prefer to be patient and not raise supply by too much too quickly, because regions such as Europe, Asia, and South America are still struggling with the coronavirus pandemic, which is pressuring demand.
