Investing.com — The U.S.’s $1.9 trillion stimulus package is set to be formally approved this week after the Senate passed it with minimal amendments on Saturday. Bond yields are on the rise again as a result, and stocks are set to open lower. China’s tech wreck continues as the market digests the implications of a relatively low growth target for this year, while oil prices have spiked following an attack by Yemeni rebels on Saudi Arabian oil facilities. Here’s what you need to know in financial markets on Monday, March 8th.
1. Senate passes stimulus package
The U.S. Senate passed the $1.9 trillion stimulus package, with minor amendments. The bill returns to the House of Representatives on Monday and may be voted through in its amended form on Tuesday, according to various reports.
The Senate left most of the package unchanged but trimmed plans for weekly unemployment benefits to $300 from an initial $400. The benefits will also now end in September, a month earlier than foreseen earlier. The proposal for a $15/hour federal minimum wage had been withdrawn at an earlier stage.
Despite some grumbling from the left wing of the party, the bill is expected to pass its second vote in the House and be signed into law later this week.
2. China’s tech wreck continues; copper also weakens
The bubble in Chinese tech stocks continued to deflate overnight, with the Shanghai Shenzhen CSI 300 falling over 3% as the implication of the Communist Party’s relatively low growth target for 2021 sank in. The country’s main tech index fell below its 100-day moving average in the process.
China’s government had indicated a growth target of around 6% on Friday after its annual agenda-setting National People’s Council. That was well below the prevalent 8% forecasts and implies a significant withdrawal of stimulus this year to rein in perceived excess leverage. China’s banking regulator warned of bubbles in global financial markets last week, in what was taken as coded warning about overvaluation of assets at home too.
There were also signs of weakness in other China-driven markets overnight, with copper futures falling around 1%, despite data showing a strong performance by both imports and exports in the first two months of the year.
3. Stocks set to open lower as yield concerns return
U.S. stocks are set to open lower, giving up some of the gains that they made in Friday’s surge as concerns about rising bond yields return to the fore.
By 6:30 AM ET (1130 GMT), Dow Jones futures were down 58 points, or 0.2%, while S&P 500 futures were down 0.7% and Nasdaq 100 futures were down 1.6%..
All three had risen strongly in reaction to the stronger-than-expected labor market report, which showed an instant impact on the services sector from the lifting of Covid-19-related restrictions on business and social gatherings.
Stocks likely to be in focus later include General Electric (NYSE:GE) and AerCap (NYSE:AER), after weekend reports that GE intends to sell its GECAS aircraft leasing business in a deal valued at $30 billion, including debt.
4. Amazon (NASDAQ:AMZN)’s food delivery startup Deliveroo confirms London IPO plans
Deliveroo, the U.K.-based food delivery business backed by Amazon, among others, confirmed plans for an initial public offering in London, one of a flurry of deals that is coinciding with a move by the City to shore up its competitiveness as a financial marketplace in the aftermath of Brexit.
The Financial Times reported that the company is targeting a valuation of $10 billion, after a year in which its top line grew by 54% to 1.2 billion pounds last year ($1.7 billion), profiting from a pandemic that forced restaurants and diners to depend on delivery services to a degree that was both unprecedented and, some argue, unlikely to be repeated. Shares in its main European rival, Just Eat Takeaway, have fallen by over one-third since Pfizer (NYSE:PFE) and BioNTech announced their vaccine breakthrough in November.
Deliveroo’s figures indicated that it was profitable at an EBITDA level only for two quarters of the year. It indicated it expects to keep posting net losses for some time as it prioritizes growth. The company had a net loss of 224 million pounds last year.
5. Oil pushes above $70 after attack on Saudi facilities
The price of oil spiked above $70 after Houthi rebels in Yemen launched a combined drone-and-missile strike against various oil industry facilities in Saudi Arabia. In contrast to the strike on the Abqaiq facilities two years ago, there was no significant damage to the facilities and no loss of life.
Saudi Aramco (SE:2222) said that the operations of the facilities hadn’t been affected.
The news reassured a market that is already at elevated levels, prices having hit their highest in over a year last week after OPEC and its allies surprisingly decided against a significant rise in output in April. By 6:30 AM ET, both benchmark futures contracts had come off their highs. U.S. crude futures were up 0.3% at $66.27 a barrel, while Brent crude was up 0.2% at $69.50 a barrel.
Source: Economy - investing.com
