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Trade optimism unwinds

Published November 21, 2019

Author – Rhys Miles

It was inevitable after weeks of positivity surrounding US/China trade talks that optimism would start to unwind as we approach the 12th hour. Reports yesterday afternoon and again overnight that a phase one agreement may not be reached this year has weighed heavily on equities markets particularly. Locally the ASX lost significant ground (1.35%) both on the trade war news and from the revelation that Westpac had broken money laundering laws 23 million times. Bank stocks were sold off aggressively dragging down the rest of the market.

Also adding to the pessimistic tone last night was China’s reaction to the passing of the US Congress of the Hong Kong Human Rights and Democracy Act. They have pledged to retaliate but how is uncertain.

No surprises with the release early this morning of the US Fed minutes of their previous meeting where they have suggested rates should remain on hold for now but can be adjusted if global risks increase further.

The AUD is now in boring territory trading in a 70 point range for the last week clearly awaiting something concrete relative to the speculation surrounding the trade talks.