Markets built on the gains from the previous sessions, to open a strong week in equities. This was triggered by the dramatic diagnosis of President Trump, hospitalisation and miraculous recovery and release from the hospital. Confidence is surging and equities look to regain previous highs, while Leader of the House Pelosi, continues negotiation for yet another round of fiscal stimulus/bail-out, with Treasury Secretary Mnuchin. Fed Chairman Powell has reiterated that another round of fiscal stimulus was necessary. The Dollar was steady, with the EUR trading 1.1770, while the GBP drifted to 1.2930.
The RBA left rates unchanged, but left the door open for monetary stimulus, while the Government announced massive fiscal stimulus through the budget. The Australian budget was a road map out of the Covid recession, announcing record spending and record deficits and debt. Australian gross debt will smash through $1 Trillion! Keynesian economic theory dictates stimulus to ignite the economic recovery and the Government has done this in spades. They have brought forward tax cuts and massive infrastructure spending, while subsidising jobs and business. The budget numbers rely heavily on a return to normality, with open borders and a vaccine?
Heroic economic assumptions, but unprecedented actions, could deliver the necessary stimulus to right the ship. The looming crises of debt and deficit can wait for another day. The AUD fell back below 0.7150, while the NZD was steady, holding above 0.6600. NZ Business Confidence numbers out today may impact local markets.