Federal Budget Draft Spurred Growth in US and EU Shares | R Blog RU


The US President has unveiled a draft budget for next year. The size of the consumable is truly impressive. We are sharing with you detailed information about how much money will be allocated, what exactly they will be spent on and how the stock market reacted to this news. The cherry on the cake – technical analysis from Maxim Artyomov.

US $ 6 trillion annual budget

On May 29, Joe Biden presented a federal budget proposal for 2022 with an expenditure part of $ 6 trillion. According to media reports, the funds are planned to be allocated for the development of infrastructure, health care and education systems.

The budget provides support for the country’s poor and middle class. The implementation of many social programs is planned. For example, the “American Employment Plan” will receive $ 2.3 trillion, and the “American Family Support Plan” – $ 1.8 trillion. The discretionary spending will amount to $ 1.5 trillion.

“The budget invests directly in American citizens and will strengthen our country’s economy and improve our financial health in the long term,” is the main thesis of the president’s opening remarks.

Shares of industrial companies in the United States rose in price

Information about an annual budget of $ 6 trillion – the highest level of spending in the United States since the Second World War – has caused a rise in the value of securities of metallurgical, steel, construction and mining enterprises.

Already on May 26, against the background of rumors about a budget project, shares of such companies showed 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%, up to $ 145.41;
  • Cemex SAB de CV ADR (NYSE: CX) – + 0.13% to $ 8.01.

On May 27, these securities continued to rise in price – by 7.62%, 6.77%, 3.07%, 1.87%, 1.12%, respectively.

Technical analysis of shares of Eagle Materials Inc and Cleveland-Cliffs from Maxim Artyomov

“Papers of Eagle Materials Inc, despite the positive news background, lost in price at the trading session on May 28. Quotes are testing the horizontal resistance level. The correction may bring the price to the lower boundary of the ascending channel. The target is the mark at $ 138. In the future, completing the next correction wave, stocks may continue to develop an upward trend. Growth to the level of $ 152 will be a signal of renewal of the historical high. “

“As for the securities of the Cleveland-Cliffs, a representative of the iron ore mining and processing sector, against the background of Joe Biden’s speech, they continue to rise. At the moment, the price is testing the resistance level, a breakdown of which will mean a continuation of the upward trend. are above the 200-day Moving Average. The target after the breakdown of the resistance will be the mark at $ 22, and then the rise with the renewal of the maximum values. “

Technical analysis of Cleveland-Cliffs stocks as of 05/31/2021

European stocks are breaking records

On Friday, May 28, the European stock index STOXX 600 (STOXX) increased by 0.57%, reaching 448.98 points. The positive dynamics was observed for seven sessions in a row, during this period it showed an increase of 2.9%.

The pan-European stock index Euronext 100 (N100) increased by 0.76%, to 1,256.6 points, the German DAX (GDAXI) – by 0.74%, to 15,519.98 points, the French CAC 40 (FCHI) – by 0 , 75%, up to 6,484.11 points. Separately, we note that these indicators are record-breaking for all of the listed indices.

Summing up the result

The draft federal budget for 2022 presented by Joe Biden provides for the allocation of a record $ 6 trillion for the development of infrastructure, health systems and education. Information about the preparation of this document provoked an increase in the price of US and European stocks.

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