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Market Outlook
ZFX: “Cash is King” returned amid risk aversion spur - ZFX

ZFX: “Cash is King” returned amid risk aversion spur

22-09-2020 07:45

Stocks in Asia-Pacific generally tumbled on Tuesday following the risk-off move overnight. Shares of HSBC and Standard Chartered continued to be the market focus, dropping over 2% during the trading session, as the report showed that they moved large amounts of suspicious funds, most likely from fraudulent activities.

Risk aversion is now the main theme in the markets. Market sentiment is bearish due to the fears of another coronavirus outbreak. Not only European countries, but also the US, may impose lockdown measures again if the daily confirmed cases further soar in the coming days. Investors once again are worried about the economic recovery. Globally speaking, restrictions means a relatively pessimistic figure of the GDP ahead.

Safe-haven demand drove the dollar up sharply on Monday, reflecting “Cash is King”. Gold, usually deemed as another shelter, again did not find any support during such panic movement, with gold price dropping more than 3% to $1882 level on Monday US trading session.

Moreover, sentiment will remain weak as the US Congress may not make any deal for the deadlock, the new economic stimulus. And, over the TikTok transaction, it is alerted that the growing China-US tensions have started to hurt the investor confidence. It is reported China may further “blacklist” those US companies after the announcement of potential ‘unreliable list’.

Traders are looking to the US open for the next steps while the US indexes futures have no good signs so far. The Fed Chairman Powell will attend Congress hearing with Treasury Secretary Steven Mnuchin on Tuesday.

ZFX analyst Jacob Leung said that we can see the sentiment suddenly turned to be cautious, bearish and even risk-averse. Although the US stocks rebounded in the late trade, experiences told that such move usually is not a bottom indication. Under the “Cash is King” condition, pay attention to the trend of the dollar, especially when the dollar index makes the breakthrough above 94.

Risk Warning: The above content is for reference only, and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations carried out in accordance with this article. Please be firm in your thinking and do the corresponding risk control.