Equity market rebounded, after a brief hiatus the previous night, as confidence again surged. US/China trade negotiators met to evaluate the progress of the ‘phase one’ US/China trade agreement. That they are talking is important, as tensions have been rising, in the lead up to the Presidential elections. US Durable Goods Orders jumped by 11.2%, reflecting the strength of the consumer, in the economic recovery. This combined with the booming housing market and has lifted economic sentiment. The virus appears to be increasingly under control, with treatments coming to the fore, while hopes of a vaccine are on the rise.
Rising confidence has allowed the safe haven US Dollar to recede, with the EUR rising to 1.1820, while the GBP surged above 1.3200. The S&P and Nasdaq hit new record, historical highs and the Dow resumed its march upward. The trade news sparked a rally in the NZD, rising back above 0.6600, while the AUD pushed up to 0.7225. Markets are looking ahead to the Federal Reserve’s Jackson Hole Symposium. The focus will be on monetary policy and inflation. Markets will look to the Fed to outline pandemic support and monetary stimulus.
The virus remains a threat to market confidence and US/China trade will continue to dominate the macro-economic conditions.