U.S. President Joe Biden proposes a $1.8 trillion stimulus package after the Federal Reserve states it is “too early” to consider the removal of emergency support for the economy.
The news encouraged even more positive movement for global shares, as gains extended on Thursday.
Following on from the $2.3 trillion infrastructure package Biden introduced last month, the $1.8 trillion stimulus package, named American Families Plan, aims to expand access to education and childcare.
The proposal includes $800 billion in tax credits and $1 trillion in new spending, with financing for free community college, aid for students, a federal paid leave program, universal prekindergarten, and expanded subsidies under the Affordable Care Act, in an attempt to help create an inclusive economy.
The plan itself would help millions of Americans gain essential life skills, qualifications, and working flexibility, enabling them to build on their current lifestyle and household income. However, the plan also includes differing criteria and conditions that need to be met in order to benefit from certain provisions.
During his speech to a joint session of Congress on Wednesday, President Biden impressed on corporations and America’s top 1% of income earners the importance of coming together during this time, helping to pay (via an increase in taxes) for the American Families Plan.
It would appear Biden’s speech and the proposed plans of the White House would cause considerable upset to the price of the dollar, trading just off nine-week lows and a long way off its peak at the end of March.
The contrary could be said for the Euro, as it hit its highest position since February, trading at $1.2150.
On course for its best month since November 2020, The MSCI world equity index was 0.2% higher. We also saw the pan-European STOXX 600 sit 0.4% higher, with Nasdaq futures rising 1.0%.
Thursday saw Oil prices extend gains, with bullish forecasts proposed for a demand recovery this summer. Brent crude for June rose to $68.20 per barrel, a rise of 1.4%, with US West Texas intermediate crude for June up to $64.74 a barrel, also rising 1.4%.
Strong oil prices had a positive impact on energy stocks, closing at their highest level in fourteen months, as Australia’s S&P/ASX 200 saw a 0.39% rise. China’s CSI300 also had a positive reaction to Biden’s proposed stimulus package closing 0.9% higher
After pleading with larger corporations and America’s wealthiest, Biden proposed nearly doubling the tax on investment income, as well as raising the tax of America’s highest earners from 37% to 39.6%.
Franklin Templeton’s chief market strategist, Stephen Dover, discusses how he believes the proposed stimulus package will have a knock-on effect on the market but explained the long-standing impact of the package on markets is too difficult to judge for now.