The global markets had another solid day yesterday as optimism remained strong that there may be a deal on the horizon between the US and China with regard to trade issues. Essentially it feels like ‘no bad news is good news’ for the equity markets at the moment and we saw positive numbers across the global indices over the course of yesterdays trading day. Currencies rallied against the greenback as haven longs were trimmed and news that President Trump was unhappy with the Fed’s tightening cycle hit the market. He also once again accused China and Europe of manipulating their currencies and advised that he feels there won’t be much progress from this week’s trade talks with Beijing which led to a brief risk sell off.
It does seem like we’re seeing a bit of market fatigue with the Presidents comments, as possibly those sort of remarks would have driven the market lower and harder earlier in the year. It seems that unless we’re getting some definitive action from the oval office on these matters the market is happy the let them slide to a certain extent. At best some of the comments with regard to the central bank can be seen as political manoeuvring and at worst they may be taken as fundamental economic naivety . One that is certain is that they will increase focus on the end of the week when we have Jerome Powell speaking at the Jackson Hole symposium.
The focus this morning will well and truly be on the Australian markets with a leadership challenge seemingly dealt with by PM Malcolm Turnbull very efficiently already and the RBA’s latest monetary policy meeting’s minutes due out later. The market is not expecting anything too drastic in terms of a change of message from the board but as usual any subtle change could lead to stronger moves in the market.
It’s relatively quiet through the rest of the days trading sessions and investors will again be looking to the news wires for anything to change the sentiment of the market. With the China – US trade situation still the main talking point through the markets any further comments in line with President Trumps statements yesterday should see more downward pressure on risk and global equities.