DAILY MARKET COMMENTARY 29TH MAY 2020

Markets have largely ignored the growing global threat, that is China, who have been aggressive across the world. China has been expanding their sovereignty across the South China Sea and now Hong Kong. They have passed laws overriding the Hong Kong legislatures autonomy, in an effort to force the City/State into the Communist regime, many years before they had committed to. The Chinese have also been fighting border skirmishes with India, which seems to indicate a more aggressive Chinese foreign policy. This will not go unanswered, but China clearly has calculated, they will prevail.

Markets have been on a massive bull run, ignoring the Chinese threat to global trade, reinforcing the prospect of a ‘V’ shaped recovery. Global economic data has been so historically bad, it can only get better, supporting market moves. The sliding Dollar reflects the growing confidence, with the EUR trading 1.1070, while the GBP rose to 1.2320. The trade exposed commodity currencies have shrugged off the growing threats to global trade, with the NZD regaining 0.6200, while the AUD charged up towards 0.6650! Trade risks remain and these currencies are extremely vulnerable to any shift in Geo-Political balances.

China is key to market progress.