Australian markets, equities and currency did attempt to lift yesterday.
Largely on a ‘buy the fact’ trader basis, but there was also a bounce in
markets generally.
Also that all important hope for an end to the previous red-neck foreign
policy toward China. That does not mean important geo-security issues can be
ignored. Simply that there is a more mature and reasoned way of communicating
unsettlement and disagreement, than grand standing at the UN Prime Ministers
address as occurred previously.
Even President Biden is today talking of reconsidering the Trump era
sanctions against China. It makes no sense at all for Australia, with China as
our major trading partner, to continue to be unduly aggressive.
Things will not change overnight. There has been significant damage in
relations in both directions, but today’s news of the first Ministerial
communication from China to congratulate Anthony Albanese and to suggest an
open door to discussions again is significant. This is a seismic shift and the
Albanese government should take care to make the most of this window opening.
We can make our arguments on all issues with China in a way that gets a
good hearing and is well received.
Markets
As suspected yesterday, the immediate Australian bounce for currency and
stocks looks to be tiring a little. Albeit after some further initial strength
in overseas markets.
The strongest looking major market at the moment looks to be Gold. Making
steady gains indeed over the past week.
While the more vulnerable of the major global markets, remains the US stock
market. The SP500 index was already rolling over again at the New York close.
This appears to be a general global market shift of pulling back from
recent risk-off behaviour, but now again beginning to fall back into that
bearish equity markets dominance overall.
Clifford
Bennett
ACY Securities Chief Economist. The view expressed within this document
are solely that of Clifford Bennett’s and do not represent the views of ACY
Securities.
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