US market: review and forecast for April 8
On April 7, the US stock exchanges ended in a mixed pattern. The S&P 500 index rose 0.15% to 4,080 points, the Dow Jones rose a negligible 0.05%, and the NASDAQ fell 0.07%. Most sectors showed modest performance, with the exception of the raw materials industry, which sank by 1.75%, mainly due to the fall of chemical companies. Rosta shares continue to outperform value companies, with treasury rates remaining close to 1.6%. Investors ' attention is focused on the prospects for opening up economies, the details of the infrastructure plan and tax reform.
- Storage technology provider SMART Global Holdings (SGH: +12%) reported quarterly results above expectations and strong guidance.
- Vehicle electrification solutions provider XL Fleet (XL: +3%) said it received an order for 19 electric pickups from Apex Clean Energy.
- Lamb Weston Holdings (LW: -3.6%) reported quarterly results below expectations, but noted a positive impact on the business from the easing of quarantine restrictions.
Today, most of the world's stock markets are showing positive dynamics. The focus continues to be on the prospects for opening up economies, the details of the infrastructure plan, potential rate increases and capital flows.
The publication of the minutes of the FOMC meeting, held on March 16-17, did not present any surprises: The economic recovery will depend on the pace of vaccination. It was noted that too fast a pace can lead to excessive risk appetite in the stock market. The participants of the meeting expect that the medium-term growth of inflation will be temporary, and therefore the regulator intends to continue to adhere to the previously chosen soft course of monetary policy.
The discussion of infrastructure reform leads to a closer attention of investors to the potential increase in taxes. On the eve of Janet Yellen noted that the tax reform will shift the balance in the direction of companies that provide a contribution to the American economy. Commerce Secretary Gina Raimondo, in turn, said that the increase in the corporate income tax to 28% is still subject to discussion in the White House.
- Asian stock markets showed mixed dynamics. China's CSI 300 rose 0.17%, Japan's Nikkei 225 fell 0.07%, and Hong Kong's Hang Seng rose 1.15%. European EuroStoxx 50 adds 0.34%.
- Risk appetite is weak. The rate on 10-year treasuries is near 1.65%. Brent crude futures are hovering around $63, while Gold is rising to $1,746. The Russel2000 index of small-cap companies loses 1.6%.
We expect that the S&P 500 will hold the upcoming session in the range of 4070-4110 points.
Economic news and macro statistics
On April 8, weekly data on the number of initial applications for unemployment benefits in the United States will be presented. Expectation: 680 thousand against 719 thousand for the previous period.
Today, the report for the 2021 fiscal year will be presented by the alcohol giant Constellation Brands (STZ). Its latest quarterly figures reflected surprisingly strong sales growth, as steady home beer consumption offset falling demand in bars and restaurants. Along with Boston Beer, Constellation Brands ' sales accounted for most of the industry-wide growth in 2020. The report released this week should contain more evidence of strong growth in imported beer brands such as Modelo and Pacifico, along with the modest success of the launch of sales of the Corona hard seltzer, which directly competes with Boston Beer's Truly franchise. Sales growth will slow compared to the previous quarter due to shifts in shipping and inventory. Constellation Brands ' revenue is expected to fall 2% to $1.865 billion. The stock's movement will depend on the forecast for the 2022 fiscal year.
Technically, the S&P 500 is still in an uptrend. On the eve of the broad market index continued to consolidate in a narrow range. The absence of a more pronounced correction is a positive factor. The MACD indicator indicates the continuation of the advantage of the "bulls", while the RSI indicator is approaching the overbought zone. We believe that there is still a little room for growth, but the S&P 500 index will meet serious resistance at the level of 4110 points, in the area of which the uptrend line runs.