Morning Commentary: Bull Run

Foreign Exchange - Morning Commentary

Bull Run

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Alan Rose
Alan Rose
Foreign Exchange Senior Trader
Markets are beginning the week on a positive and upbeat note with Chinese equities outperforming causing a positive ripple effect generating a “risk-on “environment in the markets. The primary cause for this optimism are comments made by President Trump that ‘substantial progress” is being made in the trade talks with China and he will extend the deadline for the imposition of new tariffs on China beyond the March 1 deadline.
Chinese equities accelerated sharply by 5.6% overnight on the optimistic and upbeat comments by President Trump. Chinese equities weakened sharply in 2018 on the ratcheting up of trade tensions and tariffs but since the January 3, 2019 low, Chinese equities have regained their footing and are now up by near 20%. Chinese equities also got an extra boost when Chinese President Xi promised to further open up the finance industry.
Asian equities attracted much of the attention overnight; European and U.S. equities, while higher, are less enthusiastic about the headlines as they lack many specifics and markets have been conditioned that we are only a tweet away from a rapid change in direction. But for now, the political reality is that President Trump wants a deal as the 2020 election is on the horizon and would like to conclude these trade talks with President Xi sometime next month and put much of the anxiety and angst regarding this crucial trading relationship to rest.
  • A reminder to our readers from our week ahead commentary from Sunday night is that Chairman Powell will be going before the House and Senate on Wednesday and Thursday to make his semi-annual testimony on the economy. Markets will be highly focused on his comments and answers to his views on the economy and interest rates which could have implications for many asset classes.
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