Equities opened the week strongly, after the shock hospitalisation of President Trump, last week and his subsequent recovery? It appears the President is making a strong recovery and markets were also encouraged by the prospect of a new stimulus/bailout package from Congress. It appears progress is being made on the fiscal stimulus, as the spirit of bi-partisanship soaks through Washington, following the Presidents shock diagnosis. The strong rebound in confidence allowed the Dollar to retreat, with the EUR jumping to 1.1770, while the GBP traded 1.2970.
European markets were also enjoying the good news, supported by some stronger than expected Services and Composite PMI numbers. This was followed by some strong PMI and ISM data out from the US, allowing the Dollar to drift lower, as sentiment improved. The NZD traded above 0.6600, ahead of the release key Business Confidence data, while the AUD held around 0.7170. The Australian markets will be focused on the Federal Budget which will reveal unprecedented debt, deficit and expenditure. It is expected to bring forward tax cuts and other stimulus measures to shake the economy out of the recession. The fiscal and monetary damage done by the Government has been immense and possibly an over-reaction, but history will tell that story.
The virus continues to surge in Europe and the US, with closures now more targeted, to allow the economy to function. The treatments for the virus is improving, as exemplified by President Trump. Markets will respond well to further fiscal stimulus.