Saturday, June 29, 2019

Trade Truce: Analysts React

From Bloomberg:
...Mansoor Mohi-uddin, senior macro strategist at NatWest Markets in Singapore:
“Investor sentiment is set to be buoyed in the week ahead by a truce in the U.S.-China trade war.”
“Financial markets are unlikely to significantly reduce their expectations for Federal Reserve rate cuts despite global trade tensions easing. Thus risk assets -- stocks, commodities and emerging markets -- are set to rally while the safe-haven dollar, yen and Swiss franc underperform.”
Stephen Innes, managing partner at Vanguard Markets in Bangkok:
The “reset button” being hit on trade talks was the markets’ base-case scenario, and this is supportive for risk, but the lack of a timeline for progress may cap “bullish topside ambitions.”
“With no news reading algorithms to steamroll the markets on Saturday, traders will have a 36-hour cooling off period to quantify their next move. And I would expect the markets to be very orderly on Monday open.”
The extensive lists of demands from both sides may be “a bridge too far.”
“Underlying sentiment remains quite bearish in terms of the medium-term outlook for a U.S.-China trade deal as well the global growth outlook.”
Chris Weston, head of research at Pepperstone Financial in Melbourne:
“I can’t see this meeting doing risk assets any harm, but there is still a lot of work to do to convince central banks they don’t need to act to keep the economic expansion in check.”
“A few weak shorts may look to close out on Monday” given the tariff reprieve, prospects for negotiations to restart and that both sides “actually appear more united than expected.”
Watch Sunday’s China PMI data....

HT: ZeroHedge