Live Markets: Cost-of-living crisis: all eyes on Sunak
22/03/2022 13:29
* U.S. equity index futures up; DJI out front up ~0.5%
* Euro STOXX 600 index up ~0.6%
* Dollar ~flat; gold, crude down; bitcoin rallies >4%
* U.S. 10-Year Treasury yield rises to 2.36%
March 22 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com
COST-OF-LIVING CRISIS: ALL EYES ON SUNAK (0925 EDT/1325 GMT)
With so many European households struggling to pay their
energy bills, fill their tanks and their fridges, there's a
clear expectation that governments across the region will step
up their fiscal response to the current cost-of-living crisis
and blur the macro picture further.
France, for instance, has distributed so called 100 euro
"inflation checks" to modest households and ordered energy giant
EDF to cap bills.
Tomorrow, all eyes will be on Chancellor Rishi Sunak's
Spring Statement, but truth be said, there are limited
expectations of massive spending in the UK.
"Despite the substantial fiscal headroom on offer, we don’t
think the Chancellor will loosen the fiscal taps too much", a
note from Monex read.
"We don’t expect the Chancellor to delay recent
announcements for tax hikes or scrap the plans entirely", they
said.
Berenberg economists were also quite prudent on what to
expect.
"Chances are that he will announce only modest measures to
ease the pinch on worst affected households", they said, arguing
that measures would limit the damage to growth but "would be not
a game changer that could fully dampen the shock to come".
Investec looked at the possibilities at hand and found that
among the options were a fuel tax cut, a delay in planned raise
of National Insurance Contributions, more loans or grants to pay
utility bills, local tax rebates and possibly raising taxes on
oil and gas producers.
There's also a chance that the UK government could
prioritize spending for defense after Russia's invasion of
Ukraine.
Citi believes QinetiQ and BAE could be "key beneficiaries"
but its analysts expect that "any significant changes will not
be announced until the Autumn Budget".
(Julien Ponthus)
*****
NASDAQ COMPOSITE: TROOPS STILL BEHIND THE LINE (0900
EDT/1300 GMT)
The Nasdaq Composite .IXIC just went through its longest
streak of consecutive daily closes below its 30-day moving
average (DMA) in nearly 14 years.
However, that streak ended on March 17, and the IXIC has now
seen three-straight closes back above its 30-DMA.
If the Nasdaq's daily Advance/Decline (A/D) line can join
the Composite back above this shorter-term moving average, it
may add confidence in the significance of the IXIC's bullish
turn:
From January 5 to March 16 the IXIC ended below its 30-DMA
49-straight trading days. That was the longest run of IXIC
closes below this moving average since a 68-trading day streak
from September 2, 2008 to December 5, 2008, in the midst of the
Financial Crisis.
The Nasdaq daily A/D line has now closed below its 30-DMA
for 84-straight trading days. That's its longest run of closes
below its 30-DMA since a 136-trading day streak from October 16,
2007 to April 30, 2008, also during the Financial Crisis.
The A/D line ended just shy of its descending 30-DMA on
Friday. However, the A/D line ticked down on Monday, keeping it
on the defensive.
Traders will be watching closely to see if the 30-DMA, which
consistently capped IXIC strength from its early-January
breakdown into its mid-March trough, can now act as support.
urn:newsml:reuters.com:*:nL2N2VO0M6 The 30-DMA ended Monday around 13,550.
Additionally, they will look to see if the A/D line can
reclaim its 30-DMA, potentially allowing for a coordinated march
to the upside.
(Terence Gabriel)
*****
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)