Global equity markets surged upwards again overnight, following the Fed’s announcement to purchase individual corporate bonds and further developments on the corona virus treatment. European markets rallied strongly on the news and this rally was supported by economic data releases. The important German and EU ZEW Economic Sentiment came in higher than expected, although a resurgent US Dollar, prevented this from being reflected in the currencies. The EUR fell back to 1.1260, while the GBP held it’s ground after surprisingly strong Employment data, holding 1.2580.
The rising reserve forced the trade exposed commodity currencies lower, with the NZD trading 0.6430, while the AUD fell to 0.6870. The RBA Minutes recognised the global crises and the impact on the local economy, observing the Australian economy was in the worst contraction since the 1930’s, although there was a caveat, ‘ that it may be shallower than expected’? The RBA is prepared to act, as necessary, and that was enough to settle markets. US Retail Sales surged and that enabled President Trump to tweet “Wow, May Retail Sales show the biggest one-month increase of ALL-TIME, up 17.7%”.
Markets are resurgent and enjoying a robust recovery in equity markets, which the data is increasingly supporting. The Virus is controlled and contained, with new treatments coming forward, but threats remain. China remains a threat to global trade, through aggressive actions and fallout from the genesis of the pandemic, while a possible ‘second wave’ (although receding) looms.