Sat, May 08, 2021 @ 22:28 GMT
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US Indices Rally Amid New Fiscal Stimulus, Yet PPI Data To Challenge Investor Appetite

Major US indices rallied as Joe Biden signed the $1.9 trillion additional fiscal aid package on Thursday. The S&P500 (+1.04%) advanced to a fresh all-time high, as Nasdaq rallied 2.52% as investors shortly put aside the worries that the huge extra spending would further bolster inflation expectations, spur the Federal Reserve (Fed) hawks and pressure the sovereign yields, hence the funding costs higher. Therefore, the new fiscal aid package should, in theory, back the reflation trade and encourage a further migration from growth to value stocks, although keeping the investor appetite strong enough, as, at the end of the day, stimulus is good for investor mood.

But, because the fresh stimulus package has been priced in since weeks, the concrete news didn’t shake up the sovereign bond yields. The US 10-year yield remained stable near 1.55% and investors are now ready to stomach an advance toward the 2% mark. The slower the rise, the better the appetite, of course.

There is one more challenge that investors should face today: the release of the producer price inflation data in the US, which is expected to have surged 2.7% year-on-year in February, the highest since November 2018, and up from 1.7% printed a month earlier. A solid PPI read could get the stimulus-drunk investors sober before the weekly closing bell and ugly the mood.

Activity in US futures hint that Nasdaq could be left behind its major US peers on Friday, as the continuation of the reflation trade amid the new $1.9 trillion fiscal aid approval.

On crunchy news rubric today, Coupang, the South Korea’s Amazon is up for grabs after another day of a brilliant IPO, where the shares rose more than 80% as they made their debut in New York, which briefly took the company to the rank of $100 billion club for a brief moment. Then the share price eased to close a touch below the $50 mark, still more than 40% higher than the IPO price of $35 a share. As such, the Coupang IPO was the biggest Asian company IPO after the Chinese giant Alibaba. And as its major rivals Amazon and Alibaba, Coupang has only got a bright future and a solid growth potential within the most-promising e-commerce industry. It’s sure, in the e-commerce, the bigger the company, the better, the broader and the faster the service. So, the chances are, we will have just a couple of big winners, the early comers having the biggest chances of success. Coupang is in the right place at the right time. And despite an impressive growth over the past years, the e-commerce is only at the beginning of a long and prosperous journey.

Coupang shares gained 5% in the after-hours trading and will probably continue their journey up, boosted by a solid investor appetite of the moment.

For many online business models, as gaming that we were talking about yesterday, the online retailers were boosted big time with the pandemic and the lockdown measures. But if we filter out the pandemic-effect, the e-commerce industry was already on a clear rising path even years before pandemic. But what the Covid crisis did is to bring and impose the concept of e-commerce to Europe as well. I am sure that the end of the pandemic won’t mark the end of online purchases across the old continent. E-commerce is easy, saves time in our busy daily calendars and gives access to a broad product range. Once users get the taste, they can only crave for more. Therefore, the e-commerce giants are here to thrive; locked down or freed, we won’t be able to do without them in the future. And even in Switzerland where we continue seeing a lot of resistance faced with the e-commercialisation, Digitec’s Galaxus and QoQa are making huge steps towards a bright future. Who knows, maybe we’ll see Qoqa making its way to the SMI one day.

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