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ZFX: China-US tension weighed on sentiment moderately? - Zeal Capital Market

ZFX: China-US tension weighed on sentiment moderately?

28-05-2020 04:19

The three major indexes rose again on Wednesday, as investors keep betting on the economy reopening. The rising tension between China and the US seemed to have no much impact on the stock markets.

However, cautious sentiment was reflected in other markets on Wednesday, like FX and Gold. The greenback once plummeted to the day low 98.72, and bounced back strongly to 99 level afterward. Gold price moved like V-shaped, dropping to around $1693 due to the fluctuation of the dollar. Investors alerted the escalated tension, causing sell-off pressure of the RMB. USD/CNH hit 7.1950 level on Wednesday US session.

Oil prices tumbled from the recent high level due to the China-US tension. Also, the uncertainty of the production cuts commitment between Russia and OPEC+ after June triggered profit taking.

ZFX analyst Jacob Leung said that in medium to long term, the tension between China and the US may weaken both the dollar and RMB, making the other assets like Euro relatively attractive. However, it is recommended to be very cautious as now the reactions of the markets were just mixed. We cannot easily distinguish “risk on” or “risk off” even though risk aversion sounds obvious.

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.