US and European markets saw some profit taking during overnight trade. European markets were lower after some disturbing trade numbers from the engine room, Germany. German Trade Balance and Current Account both fell sharply, as Exports collapsed by 24%, while imports contracted 16.5%! EU GDP contracted 3.6% for the Quarter, while the annualised rate, fell 3.1%. These numbers are terrible, but are historical, and should turn around as European economies re-open.
The NASDAQ broke above 10,000, for the first time ever, supported by the Tech stocks which have travelled well through increased demand over the pandemic. The S&P also moved back into positive territory for the year, as share markets project the future rather than economic statistics, which are historical. The World Bank projected a 5.2% contraction in the global economy, the worst contraction since WW2, while the National Bureau Research declared the US economy in ‘Recession’. The rising economic confidence was reflected in the EUR, which rallied back to 1.1340, while the GBP traded 1.2735.
The two day FOMC meeting began overnight and tonight, should reveal a continuation of current monetary policy, ‘QE Infinity’. The trade exposed commodity currencies suffered a stall in their recent break out, with the AUD sliding back to 0.6950, while the NZD fell back to just above 0.6500. Australian Job Ads moved into positive territory, while Business confidence fell, although a big improvement on projections and previous appalling levels.
A market breather, may be just that, allowing the bull run to continue. The virus appears to be contained and controlled, while markets re-open successfully. Threats are considerable and remain ever present.