Janet Yellen’s claim that the US needs to ‘act big’ with its covid-19 stimulus has re-heated the markets hopes for the Biden administration’s relief package.
The former Fed chair, and soon-to-be Treasury Secretary, is set to face the Senate Finance Committee this evening, and has stressed in her prepared statement that the ‘smartest’ thing to do is aggressively pursue the previously announced $1.9 trillion plan.
How Yellen fares this evening will give the markets – and the incoming administration – an early indication of the resistance to the package, and what can be expected from the first few weeks of Biden’s tenure.
Following a very quiet Monday, Yellen’s comments have acted as a reminder that stimulus is incoming, in some form, allowing for a more positive start to Tuesday’s trading.
The FTSE added 0.4%, hitting 6,750 after drifting lower yesterday afternoon. The DAX was right there alongside the UK index, its own 0.4% increase pushing it back to 13,900; the CAC, on the other hand, was a tad slower, rising just 0.2%.
Most importantly, the Dow Jones is heading for a half a percent – or 140 point – increase when it returns from its MLK Day break this afternoon. That would leave the index a few points off 31,000, close to clawing back the losses incurred at the end of last week.
Those gains would mean investors are currently willing to ignore the alarming covid-19 numbers coming out of the States, where deaths are rising in nearly two-thirds of the country. As well as reports of further restrictions in Germany. And 100 new cases in China. In other words, if Tuesday’s gains are to last the day, the market’s pandemic blinkers are going to need to be strapped on nice and tight.
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