Equity bull theme resumes (despite US-China tensions)


Macroeconomic/ geopolitical developments

  • The positive “risk on” theme was again reinforced by additional positive steps regarding the launch of an €750bn EU recovery fund.
EU recovery fund
  • The “risk on” theme was evident despite tensions between the US and China increasing in late May, intensified by developments surrounding Hong Kong.
  • However, President Trump did not indicate economic sections and was seen as less dramatic than feared at Friday’s press conference, through did announce that the USA would leave the World Health Organisation.
  • Soundings continue to be encouraging regarding the potential for a coronavirus vaccine.
  • The number of new cases and deaths from the COVID-19 virus continues to decline in many European nations and US States, which are all continuing to relax lockdown restrictions and reopen their economies.

Global financial market developments

  • The recovery rally in global stocks has seen the major global averages post bullish breakouts from April-May consolidation ranges.
  • In the Forex space, the “risk on” theme is still not as strong as that seen in equities, but has seen the US Dollar weakening, as the Euro rallied.
EURUSD chart

Key this week

  • Central Bank Watch: Tuesday we get the Reserve Bank of Australia (RBA) meeting and interest rate decision, Wednesday brings the Bank of Canada (BoC) meeting and decision, and Thursday sees the European Central Bank (ECB) meeting and press conference.
  • Macroeconomic data of note includes; global Markit and Institute of Supply Managers (ISM) Manufacturing, Services/ Non-Manufacturing and Composite Purchasing Managers Index (PMI), Australian Gross Domestic Product (GDP), US Jobless Claims, US and Canadian Employment reports
  • New cases and deaths from COVID-19 will remain in focus as lockdown rules are relaxed in Europe and the US.
DateKey Macroeconomic Events
01/06/20Markit and ISM Manufacturing PMI
02/06/20RBA meeting and interest rate decision
03/06/20Australian GDP; Markit and ISM Services/ Non-Manufacturing and Composite PMI; BoC meeting and interest rate decision
04/06/20ECB meeting and interest rate decision; US Jobless Claims
05/06/20US and Canadian Employment reports

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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