Asian equities took a dive into the deep end overnight, ahead of this weekend’s G7 meeting (which The Donald will not attend) and, more importantly, his crunch summit with the North Korean dictator next week.
“All signs point to Trump inserting foot in mouth and generally not making friends with traditional US allies, so it’ll be interesting to see the headlines that come out of that,” says John J Hardy, Saxo’s Head of Forex Strategy.
But whatever embarrassments may await world leaders in Toronto, equities have already suffered the indignity of steep declines: “The biggest carnage was in Asia, with Tencent, for example, down 3%” says Peter Garnry, Saxo’s Head of Equity Strategy. Such falls came despite a noticeable absence of specific triggers. “The only thing that has happened in the past 24 hours is the downturn in G7 rhetoric,” he says.
And as risk appetite soured in equity markets, we saw the mirror image of this development in forex where the US dollar and the Japanese yen firmed, especially versus the smaller and traditionally risk-correlated G10 currencies and those from emerging markets too, Hardy says.
This EM space continues to be plagued by volatility: “We’ve seen the Brazilian real continue to worsen with the central bank not really shoring up confidence yesterday, but merely saying it would consider using reserves and didn’t want an emergency meeting as Turkey did when it hiked recently”.
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.