Investors hesitate between taking profit and letting the market slip on second-wave fears and carrying the actual rally higher on reassurance that the Federal Reserve (Fed) and other central banks would mobilize more measures to support asset prices. And it seems as today is the profit-takers’ turn to move the markets.
US equity futures are down in Asia after a mixed US session, where the S&P500 (-0.36%) and the Dow (-0.36%) closed in negative as Nasdaq (+0.15%) secured timid gains.
On a side note, we believe that the latest revelations about Donald Trump asking Xi to help him re-win the November election by buying massive quantities of farm products wasn’t a shocker and should have little-to-no impact on market direction, as Trump’s intention in striking the phase-one deal was already clear to investors.
If there is one serious threat to Trump’s victory this year, it is the pandemic that has ravaged the economy as never before and China could do only little to help him get through with it.
Stocks in Asia lacked a clear direction, as unemployment in Australia rose more-than-expected to 7.1% in May, and the New Zealand GDP growth fell 1.6% in the first quarter, versus -1.0% penciled in by analysts and +0.5% printed a quarter earlier.
Activity in FTSE futures (-0.90%) hint at further consolidation after the British blue-chip stocks failed to extend early session gains on Wednesday and closed near flat. Banks and energy stocks which led the morning rally turned negative into the closing bell. News that the UK is planning a ‘shock and awe’ campaign to prepare businesses for Brexit reminds investors that the divorce will happen by the end of this year, come hell or high water. In this respect, especially small and medium sized British companies already battered by the Covid-19 pandemic, may suffer additional economic consequences. This means there is some extra spending for the UK government on the horizon, and the Bank of England (BoE) should throw its pinch of salt to maintain the favourable conditions to support the financial markets.