Current News

So what has happened in the markets recently?

The optimism following the trade truce was cut short earlier than expected, with Trump threatening new tariffs of 10% on the remaining U.S. $300 billion of Chinese imports to go into force on 1 September, though there were some backtracking as tariffs on selected consumer items will be delayed to December. The U.S. Federal Reserve (Fed) also disappointed markets with hawkish commentary after a rate cut but other central banks around the world continued to provide liquidity with cuts.

The S&P/ASX 200 has been resilient. At the time of writing, it is down only about 3% over the past month. The U.S. S&P 500 is down close to 6% in the same period. Similarly, the Euro Stoxx 50 is down over 6% and China’s CSI 300 index is down about 5%.
Commodities sold off following fears of a further economic slowdown due to the prolonged trade tensions. Oil remains weak despite Iran sanctions as demand continues to worsen. Iron ore is plunging after holding up strongly relative to other industrial metals over the past year. On the other side of commodities, precious metals continue their rally with gold leading the way.

The Fed’s hawkish commentary immediately resulted in a spike in yields but Trump’s tweet the next day subsequently sent bond yields tumbling to previous lows. The yield curve continues to invert further, with the key 2-year/10-year spread now negative. Bonds performed strongly in this environment, with the Bloomberg Barclays Global-Aggregate bond index returning over 1.9% the past month.

The Australian Dollar weakened again to around 68 U.S. cents as demand for the U.S. dollar safehaven rose.

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