DAILY MARKET COMMENTARY 27TH MAY 2020

US Markets surged with confidence after the Memorial Day long weekend. Markets were awash with further positive news over progress on a vaccine, for the coronavirus. There are many companies now testing a vaccine for the coronavirus and the latest launching human testing was Novavax, while Merck announced progress and others joined the race. There is growing confidence surrounding the re-opening of European and US economies and with it a ‘snap-back’, V-shaped recovery! The safe haven Dollar continued to cede ground, with the GBP charging up to 1.2325, while the EUR approaches 1.0980. Economic data is now stabilising and looks to have bottomed out. US Consumer Confidence reflected this and US New Home Sales turned positive, adding 623,000 new home sales.

European markets are also re-opening successfully, with the virus contained and under control, allowing markets to surge. European countries are now re-opening the tourism industry, with border restrictions being relaxed. Commodity currencies took full advantage of the weaker reserve, with the AUD approaching 0.6650, while the NZD hit 0.6200! NZ Trade data was a reflection of recent times, with a collapse in imports, while exports continued, improving the balance but not for the best reasons. The real threat is to global trade is China and the interaction with other nations. The political moves to oppress Hong Kong political freedoms, may have serious consequences, as the US administration threaten further sanctions if the Chinese proceed with legislation.

Optimism is abounding in global markets but the China trade threat remains a dark cloud.