Today is rich with business activity data for many leading economies. Before the US session starts, purchasing managers index for France, Germany, the EU as a whole, and the UK will be published. The US PMI will be released after the start of the session.
Overall, the markets are optimistic. France’s PMIs are forecast 0.4–0.8% ahead of last month's figure, Germany’s PMIs are expected to be 0.3–0.4% ahead, and the UK’s PMIs are predicted to be 0.1–0.2% ahead.
The EU indices are expected to rise 0.2–0.3%.
The forecast for the US is more modest. The indices are expected to increase by 0.1%. However, it should be taken into account that they are above the 50% mark, which indicates that there are no signs of recession, unlike in some European countries.
If the actual PMI data exceeds the forecast, the market will take it as another positive signal and support the growth of the S&P 500 index.
Yesterday’s report by the US Department of Labor shows no signs that the dismissal of government employees in federal agencies and serious spending cuts by the Donald Trump administration could negatively impact the economy in the near future.
The number of US initial jobless claims grew moderately last week, indicating that the labor market remained steady in February.
According to the economists who expect a spillover to the private sector, it is too early to see any negative effects. Thousands of federal civil servants have been laid off in recent days by the Department of Government Efficiency.
The current round of budget cuts and layoffs has not yet been reflected in the statistics. However, the actions of the new administration are a risk factor and could lead to a broader economic slowdown.
Record low levels of layoffs support the steady labor market. However, that could change as workers who rely on federal government contracts or funding lose their jobs. The White House intents to lay off 2.3 million federal government employees. But at the moment, financial markets have been little affected by these prospects.
This inspires some optimism for further growth of the S&P 500 index.
The overall recommendation is to keep buying S&P 500.
Profits should be taken at the level of 6200. A Stop loss could be set at the level of 6100.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
