The ASX share market is on track to have a good day today after the COVID-19 government package was finally agreed in the US.
What happened?
Over in the US, the share market jumped on Friday after it was announced that the COVID-19 relief package had been agreed. One example of the rise was the S&P 500 going up by almost 2%, even though it was in the red just before midday.
It was reported that Democrats were able to get it across the line because the unemployment benefit top up was lowered from $400 to $300 a week, but extended it to 6 September 2021. This is what changed Democratic Senator Joe Manchin’s mind.
Another element of the support that wasn’t passed was an increase in the federal minimum wage from $7.25 to $15 an hour spread over five years.
A key part of the support is payments of $1,400 per person for single people earning less than $75,000 and couples earning less than $150,000.
Other areas of support include support for parents, additional funding for COVID-19 testing and vaccines, business support, funds for local governments and health insurance assistance.
What to make of this
I think it’s good news for the American economy and share markets generally.
We’ve seen how helpful the government stimulus in Australia has been. The jobkeeper and higher levels of jobseeker have been a clear boost to the economy.
Just look at how strongly certain areas of the economy are doing. Businesses like Wesfarmers Ltd (ASX: WES), Super Retail Group Ltd (ASX: SUL), JB Hi-Fi Limited (ASX: JBH), Adairs Ltd (ASX: ADH), Nick Scali Limited (ASX: NCK) and so on are seeing a roaring trade.
The US economy have been suffering due to all the impacts of COVID-19, but with the vaccines now being distributed widely, things look like they could be opening up again.
Businesses like Walt Disney and hotels could start to see a recovery the further 2021 goes on.
The ASX tends to follow the US share market with day to day movements, so that’s why ASX shares are likely to have a good day today.
