US Federal Draft Budget Made American and European Stocks Grow
US President made public the draft budget for the next year. The expenditure part is hilarious. Get into the details of how much money the government will spend and on what, and how the stock market reacted to this news. As a cherry on top, enjoy tech analysis by Maksim Artyomov.
US annual budget amounting to $6 trillion
On May 29th, Joe Biden presented a federal budget project for 2022 with an expenditure part of $6 trillion. The media say that the money will be allocated for the development of infrastructure, healthcare system, and education.
The budget includes support for poor population and the middle class. A lot of social programs are planned. For example, the American Employment Plan will get $2.3 trillion, the American Family Support Plan — $1.8 trillion. Discretion spending will amount to $1.5 trillion.
President Biden claims that the budget invests directly in American people, supporting the economy and enhancing financial health of the nation in the long run.
US industrial stocks growing
The news that the annual budget would amount to $6 trillion, which is the largest expenditure since WW2, made the shares of metallurgical, steel-casting, building, and mining companies grow.
On May 26th already, when rumors about the draft budget started spreading, the shares of the following companies demonstrated growth:
- Century Aluminum Company (NASDAQ: CENX) — +5.47% to $12.43;
- Cleveland-Cliffs (NYSE: CLF) — +3.96% to $18.92;
- Freeport-McMoran Copper & Gold (NYSE: FCX) — +1.57% to $41.32;
- Eagle Materials Inc (NYSE: EXP) — +1.43% to $145.41;
- Cemex SAB de CV ADR (NYSE: CX) — +0.13% to $8.01.
On May 27th, these shares kept growing, by 7.62%, 6.77%, 3.07%, 1.87%, and 1.12%, respectively.
Eagle Materials Inc and Cleveland-Cliffs tech analysis by Maksim Artyomov
"Regardless of the positive news, the shares of Eagle Materials Inc dropped on May 28th. The quotations are testing the horizontal resistance level. The correction might drive the price to the lower border of the ascending channel. The aim is $138. When the correction is over, the shares might continue the development of the uptrend. Growth to $152 will mean a renewal of the all-time high".
"As for the shares of Cleveland-Cliffs, a company for the extraction and beneficiation of iron ore, they keep growing stimulated by Joe Biden's statement. The quotations are now testing the resistance level. A breakaway will mean the uptrend continues. This scenario is supported by the position of the quotations above the 200-days Moving Average. The aim of growth after the breakaway will be $22, upon reaching which, the quotations will head for new highs".
European shares setting records
On Friday, May 28th, the European stock market STOXX 600 (STOXX) grew by 0.57%, reaching 448.97 points. Positive dynamics remain for seven sessions in a row; overall growth is 2.9%.
The pan-European stock index Euronext 100 (N100) grew by 0.76% to 1256.6, the German DAX (GDAXI) — by 0.74% to 15519.98 points, the French CAC 40 (FCHI) — by 0.75% to 6484.11 points. Note that for all the indices, these results are all-time highs.
Draft federal budget for 2022, presented by Joe Biden, presumes spending record $6 trillion on the development of infrastructure, healthcare system, and education. The news about the document being prepared made American and European stocks grow.