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How the Markets Looking at the End of Biden’s First Quarter

On January 20, Joseph Robinette Biden was sworn in as the 46th president of the U.S.

Many people in the US and across the world have been hoping since that his first term as president could uplift the pandemic-infused economy.

Let’s take a look at whether or not it has so far.

A look back

Biden’s election win saw money pouring into equity markets. Stocks on Wall Street rallied to record highs, and the S&P 500 rose 1.4 percent. By the end of January 2021, the S&P 500 was up 9.6 percent.

Between election day on November 3rd and inauguration day on January 20th, the S&P 500 index had climbed 14.3 percent.

Then something out of the ordinary happened. Donald Trump loyalists stormed the US Capitol. The chaos rattled and undercut the market.

The threat, while violent and unsettling to many Americans, ironically event ended up helping investor confidence which had been dampened over concerns that Trump would continue being a source of uncertainty by disrupting the transfer of power.

The Biden bump

The markets did recover after Biden’s inauguration and while his administration quickly set in motion plans to achieve his campaign promises of more economic growth.

the S&P 500 rose to 3824.26, the Dow Jones jumped 257.86 points to reach 31,188, and the NASDAQ climbed 2% in January, to close at 13,457.25.

The best performers coming out of the election win were banks, industrial companies, and small stocks.

Companies that had previously done well under the corona lock-down period like Zoom and Peloton Interactive wobbled.

While in office, the new president has continued to move quickly to address the pandemic implication and execute his climate change agenda.

He recently won approval for an economic stimulus package that experts say will expedite the country’s pandemic recovery. All of these moves have played out positively in the markets.

The greenback

The first quarter proved bullish for the greenback. GBP/USD trended upwards, reaching above 1.40. The pair could move back and forth for the next quarter, but overall it remains bullish.

The EUR/USD experienced some strain in the first quarter due to lockdowns in Europe. The ECB will likely look to weaken the EUR to boost exports; therefore, we can see the pair continue their bearish run.

Gold

The metal started 2021 on a high, but during Biden’s first quarter, XAU experienced a new downturn reaching below $1650.

This was due to higher bond yields, which increased the demand for USD and pressurized the yellow metal. With an expected weaker USD in the upcoming days, gold could retrace above the $1750 mark.

So far, so good

So far in March, the S&P 500 also narrowly eked out a record closing high. The Dow added nearly 300 points or 0.9 percent.

In the first quarter, we saw cyclical stocks like the energy and the finance sector surfacing. Many experts think the rise could continue for the next several months, on the tail of positive news about the coronavirus vaccine and lockdowns potentially easing soon in many states in the U.S.

Biden’s new stimulus package will continue the S&P’s rise. The analyst consensus estimates that 2021 S&P 500 earnings will grow over 22 percent by the end of the year —representing more than a full recovery back to 2019 levels later on in the year.

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