🏀The “Hopeful” Market⌛️

Equity rose sharply as investors pinned their hope of a possible ceasefire between Russia and Ukraine. The prospect of de-escalation helped to cushion the fear of a heighten inflation given the worsening of supply chain and the effect of high oil prices due to the geopolitical uncertainty. 

As Russia indicates a reduction in military activities near the Kyiv, WTI crude oil prices retreated as it stayed below the high of $130 hit in early March. 

While there appeared to be progress, Pika World is cautious that the recovery appeared stretched given a brightening sentiment. 

🏋️President Biden Budget Plan🗽

In his latest federal budget for 2023, President Biden’s plan could pressure companies to review their share repurchase policies. Essentially, executives are expected to hold on to their company shares for multiple years after receiving them. This means that they will not be able to sell these shares for some years after a stock buyback is initiated. 

The move will prevent companies from using the profits to enrich their holding of shares through stock repurchase. Instead, it is hopeful through the plan, companies will better utilise the cash for investment in growth and innovation in the long term. 

However, it is unclear if such a plan would pass the US Senate that is divisive along party lines. After all, fine details will need to be uncovered. For example, under what role someone would be classified as an “executive” can be contested. 

The market will be looking for clues on how it could impact equity prices if shares buybacks are curtailed. Of course, dividend payout, as discussed in yesterday’s update, is one of the various ways companies may explore to reward their shareholders.