Daily Market Commentary 23rd May 2023

The G7 meeting in Japan over the weekend had little to no impact on markets, as expected, but provided a place under ‘the rising sun’ for leaders to parade. There was some worrying focus on China and decoupling, which suggests Western sanctions may be being considered, but this was mitigated by the language used. The talk was of ‘De-Risking’ rather than decoupling. The G7 cannot afford to decouple from China, for many reasons, including the sheer size of the Chinese economy and manufacturing base. A decoupling would destroy current supply chains and be catastrophic for Europe and the USA. Debt ceiling talks, that broke down last Friday, are scheduled to resume Monday (US Time). The Greek elections saw the Conservative ruling party come out on top, which boosted local equity markets, although a second election may be called to ensure a absolute majority for the Government. The EUR remained steady, trading around 1.0800, while the GBP held 1.2400.

Commodity currencies remained flat, with a static reserve, awaiting PMI data from Asia, Europe and the USA. The AUD is consolidating above 0.6600, while the NZD has remained steady above 0.6250, ahead of the RBNZ meeting.