DAILY MARKET COMMENTARY 21ST MAY 2020

Equity markets continued to book gains, as both European and the US economies continue to re-open, without any significant spike in infection rates. The re-opening of these economies are the only way they can survive and avoid a deep and destructive recession. Government support and stimulus cannot do the job. Much of the re-open has become political, with extreme lock-down positions maintained by the left, while right wing parties advocate for a full and quick re-opening process. The surging equity markets reflect the positive process and the falling Dollar only confirms the risk appetite. The EUR has jumped to 1.0985, while the GBP drifted back to 1.2230, following some disappointing local inflation data.

The trade exposed commodity currencies have enjoyed the market rebound, with the AUD now approaching 0.6600, while the NZD trades around 0.6140. The rise in market confidence and successful re-opening across NZ and Australia, has spurred a rally in these volatile currencies. The growing international concern over China and trade repercussions, may be a threat to the current supply chain, which would damage these trade exposed economies.

The re-opening of economies has dominated markets, along with the progress of a possible vaccine and cures/treatments, are likely to continue throughout this week.