Daily Market Commentary 11th August 2020

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Markets opened the week strongly, shrugging off deteriorating Sino-US relations and flocking to global equities. The mass of monetary and fiscal stimulus is supporting the huge rally in global share markets, while the threats come from the virus and the impact on economic re-openings. President Trump stepped in, with executive action, after Congress failed to agree on further bailout/relief funds. Congress has been at an impasse and previous Unemployment and rent protection orders had expired. Trump has extended Unemployment benefits, student loan repayment deferment and added a payroll tax holiday. This was a relief to many and should sustain victims of the pandemic.

President Trump had also signed executive orders to ban Chinese social media, WeChat and TikTok, which has heightened tensions between the two countries. The relationship is deteriorating and will being to harm the global supply chain. Markets appear to have largely ignored these actions and equities have rallied, while the Dollar stabilised. The GBP traded 1.3070, while the EUR slipped back to 1.1750, looking for economic data indicators to point to economic direction.

The US/China tensions should have had a negative impact on the trade exposed commodity currencies, but they held their ground. The AUD traded around 0.7150, while the NZD remains below 0.6600, ahead of the RBNZ statement during the week. Macro Geo-Political issues remain the key driver of market sentiment.

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