Weekly Market Commentary
Global equities continued to lose ground, to close a week of serious losses, triggered by the ramping up of the US/China 'Trade War'. The US announced the imposition of a further 10% in tariffs, on the balance of $300 Billion of Chinese exports, to the USA. This has triggered a major hit to equities, bonds and currencies. The flow-on effect of the trade war, is the fear of the impact on global growth, explaining the hit to Oil prices and Bond Yields. President Trump announced some positive trade news, that counter some of the losses in US agriculture, with a trade deal over US Beef exports to the EU. He pranked the press corps that the EU had agreed to a 25% tariff on Mercedes and BMW, which brought laughter after he outed to the joke.
The trade news hit commodity currencies hard, with NZ and Australia heavily exposed to the Chinese markets. The AUD has now hit a 10 year low, slipping below 0.6800, while the NZD fell to 0.6535. The ramping up of the trade war, directly impacts the supply chain and the announcement of a US/EU deal on US beef does not assist the Australian Beef exports to Europe. Non Farm Payrolls in the US confirmed the strong domestic economy and reassures markets that the US has the power and resilience to weather the trade war.
This coming week will continue to be dominated by global trade wars and economic growth prospects. The RBA and RBNZ are meeting this coming week and are expected to confirm stimulative monetary policy, in an attempt to boost their respective economies. The Chinese continue to fight the US trade war with monetary stimulus, domestically. The 'long game' being employed by the patient Chinese administration, may prove to be extremely painful, so to have an authoritarian Government helps with the political fallout.
Weekly Market Calendar
5/8 Australia Services/Composite PMI, NZ Dairy Auction, NZ Commodity Prices, China Services/Composite PMI, Italy/France/UK/German/EU Services/Composite PMI, US Services/Composite PMI, ISM Non Manufacturing Composite
6/8 NZ Employment, Australia Consumer Confidence, Australia Job Ads, Australia Trade, RBNZ Inflation Report, RBA Rate Decision, German Factory Orders
7/8 NZ House Prices, RBNZ Rate Decision, German Industrial Production, UK House Prices, US Weekly Mortgage Applications
8/8 Japan Current Account, Japan Trade Exports/Imports, China Trade Exports/Imports, US Weekly Jobless Claims
9/8 NZ Migration, Japan GDP, NZ House Sales, China Current Account, China CPI, German Trade Exports/Imports, UK GDP, UK Industrial/Manufacturing Production, UK Construction, UK Trade Exports/Imports
Thanks and Regards
Paul Bettany
Collinson & Co
0406-744-923