Daily Market Commentary 18th August 2020

Pressures build between China and the US and markets are reflecting this, as the impact of the second wave of the coronavirus becomes apparent. The US and China were set to review their trade agreement but that has been abandoned and no replacement date offered. The US Government has also moved to sanction Chinese Social Media site ‘TikTok’, as tensions rise in the lead up to the US elections. The US Congress has failed to deliver in the latest round of stimulus and are now in recess.

Asian markets were not enamoured by the rising trade tensions and some terrible contractions in Japanese GDP.  The Dollar drifted lower, allowing the EUR to rally to 1.1850, while the GBP regained 1.3100. The return of the virus to New Zealand, after a recent declaration of victory, has resulted in a further lockdown. The Government has also acted to delay the September election by 4 weeks, none of which was welcomed by markets. The AUD approached 0.7200, while the NZD drifted to 0.6530, despite a weaker reserve currency.

The macro-themes of the pandemic and the US/China Geo-Political tensions continue to dominate markets.