US open: All eyes on Biden’s infrastructure proposal
Matt Weller, CFA, CMT March 31, 2021 8:40 PM
The biggest development to watch today will be high-level proposals in US President Biden’s infrastructure plan...
US index futures:
- Dow futures -0.1% to 32,909
- S&P 500 futures +0.1% to 3,953
- Nasdaq 100 futures +0.6% to 12,957
- FTSE -0.1% to 6,762
- Dax +0.0% to 15,009
- Euro Stoxx 600 +0.2% to 432
US indices pointing to a tepid open
US stocks are pointing to a mixed start as traders weight the continued strength in treasury bond yields (a close near the current 1.73% level in the benchmark 10-year yield would mark the highest since January 2020) against better-than-expected Chinese manufacturing data overnight (51.9 vs. 51.3 expected).
As of writing, the US ADP employment report has just been released, showing 517k jobs were created, a tick below expectations of a 552k reading after last month’s upwardly-revised 176k figure. This report paints a potentially bullish picture ahead of Friday’s highly-anticipated NFP report.
Biden’s stimulus plan
The biggest development to watch today will be high-level proposals in US President Biden’s infrastructure plan. The proposal is expected to come with a $2T price tag to revitalize U.S. transportation infrastructure, water systems, broadband and manufacturing, among other goals. This represents just the first of two infrastructure bills, with a second, more partisan proposal focused on “human infrastructure” (read: education and health care reforms) expected in the coming weeks.
Of course, politicians try to avoid outright deficit spending, so the bill is expected to come with an increase in the corporate tax rate and attempts to close loopholes around “offshoring” corporate profits, a development that may hurt technology companies more than other firms if passed.
US stocks in focus
Chewy (CHWY) earned a surprise profit of $0.05 per share, well above expectations of a $0.10 loss, with revenue surging 47% y/y. The stock is trading up more than 13% in pre-market trade.
Marijuana stocks like Tilray (TLRY), Canopy Growth (CGC), Aphria (APHA), and Aurora Cannabis (ACG) are all on the rise in pre-market trade on news that New York State would become the 15th state to legalize recreation use of the drug.
Apple (AAPL) was upgraded to “buy” at UBS on expectations of more stable long-term iPhone demand. The stock is trading up nearly 2% in pre-market trade.
Where next for Chewy share price?
After seeing a sharp drop in February to test its 200-day EMA, Chewy (CHWY) is poised to open near its 50-day EMA near $91.00. The stock’s RSI indicator has been showing a bullish divergence over the last couple of weeks, signaling that selling pressure was waning even before yesterday’s strong earnings report, so bulls will want to see if the stock can re-establish a foothold above 91.00 to open the door for a potential continuation back into triple-digit territory in the coming weeks:
Source: StoneX, TradingView
FX – Quiet with a dash of yen weakness
The FX market is seeing a relatively quiet end to the quarter, with the day’s most notable development being the slight weakness in the Japanese yen.
EUR/USD is stabilizing above its nearly 6-month low at 1.1700, though market’s bias remains to sell any near-term bounces in the pair for now.
GBP/USD is in the middle of this week’s range at 1.3766.
USD/JPY is extending its rally for a 6th straight day to approach the 111.00 handle.
Learn more about forex trading opportunities.
Oil steady ahead of tomorrow’s big OPEC+ meeting
Oil is ticking up in slow trade ahead of tomorrow’s highly-anticipated OPEC+ meeting. The group is expected to leave production unchanged as COVID variants force lockdowns in a number of major markets, but there is risk of increasing production if the different blocs within the cartel are unable to reach an agreement, as we saw at this time last year.
Attention will now turn towards the API stockpiles data due later today.
- US crude trades +0.3% to $60.55
- Brent trades +0.2% at $64.04
14:00 GMT – US Pending Home Sales
14:30 GMT – Crude Oil Inventories
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.