Daily Market Commentary 5th January 2021

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US markets opened the first trading day for the year with a shocking plunge in equity markets. The Dow crashed 700 points, triggered by virus fears and the associated restrictions and the upcoming Senate election in Georgia. The virus is mutating and spreading across Europe and the USA with the associated restrictions, in response, further devastating the economies. The Georgia Senate runoff has the potential to give the Senate to the Democrats, thus joining the House and the Presidency. Wall Street love divided Government and fear uncontrolled power by one party, especially the promised fiscal catastrophe of the incoming Biden administration. The US Dollar gained ground, with the EUR falling to 1.2250, while the GBP fell to 1.3550.

The rising reserve halted the surging commodity currencies, with the AUD falling from 0.7740 to 0.7640, while the NZD dropped from 0.7230 to 0.7160. These commodity currencies have travelled well, as their natural geographic protections, have allowed the containment of the virus. Their economies are not immune from the global economy. The shocking open to this years markets have rocked these trade exposed currencies.

The US political upheaval remains a serious threats to market this week, with the Georgia Senate races and the joint Congress meeting, to decide electors on the 6th of January. Expect fireworks!

Collinson & Co Contact