Sunset Strip - 24th September 2020
Local market was bashed at the open on global sentiment but recovered through the day to deliver another negative day. We have had 6 negative days out of the last 8 as global indices trend suggest pullback risk is elevated. All sectors were hit with Tech and Energy hit the hardest. The slight recovery in the last hour was mainly from global investors buying back into banks and health care for currency trade.
European economy is showing signs of slowdown ahead of the lockdown restrictions. Euro is taking a hit as global investors run out. The biggest cross rate for Euro is USD and hence USD is getting jammed up. Rising USD hammered AUDUSD before the Treasurer threw the kitchen sink to take it down by flagging there is no economic plan to get back to budget surplus for the next decade!!! AUDUSD is now testing 70 cents after pushing 74 cents last month. Iron Ore is on a massive slide and it is looking very much like the stockpiling is over. RBA is so far removed from reality they are now stuck to jawboning. We know EU has joined Japan as economic ponzi scheme but it is matter of time US joins the party. Australia is like a teenager who doesn’t want to be left out of the currency war. RBA and Treasurer came out with their currency devaluing stories and it worked today. When USD confirms endless money printing to support their fading economy, there isn’t much EU or Australia can do but watch their currency and gold go higher. No one is talking about vaccines anymore but cases are rising in almost all continents of the world…except AUNZ!!!
US market started positive overnight and was bashed all day to deliver a negative day. Everything was hit except USD on risk off trade. All US sectors were negative with energy and tech leading the pain. NASDAQ lead the falls when DOW started over 100 up and finished over 500 down. EUR keeps falling on pandemic lockdown and pushing USD higher. Higher USD is pushing AUDUSD lower… now near 70 cents after Treasurer flagged no budget recovery as far as the eye can see. Gold has taken a hit but we are in Aussie gold miners and Gold in A$ has held up really well. Everyone in the US is calling for more stimulus and gold outlook remains robust.
Remain nimble, contrarian and cautiously pragmatic with elevated global macro risks!!! Buckle up...it’s going to get bumpy!!!
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Over 25 years’ experience in the finance/tech industry. Mathan has worked extensively in all parts of the finance sector (i.e. County NatWest, Citi, LIM, Southern Cross, Bell Potter, Baillieu Holst and Blue Ocean Equities). Currently Founder and...