ZFX: Trump’s move surprised Wall Street! Dollar gained amid risk-off
On Wednesday, Asia-Pacific stocks were mixed after President Donald Trump called off the negotiations with the Democrats regarding the new relief bill, which is a hope of the investment market recently.
Such bad news took a hard hit to Wall Street on Tuesday. The Dow closed down 1.34%, the S&P 500 lost 1.4% and the Nasdaq dropped the most, 1.57%. In the earlier US trading session, all three indexes were higher as investors were optimistic over the stimulus package, especially under the severe coronavirus outbreak situation.
ZFX analyst Jacob Leung said that, as Trump said, the bill will just restart till after the November election. So, such hopes may not prop up markets anymore, at least in October, if no further change.
On the other hand, Fed Chairman Powell called for continued aggressive fiscal stimulus on Tuesday. He warned that, without such fiscal stimulus, the US economy may go into recession.
Due to the bad news, European stocks are expected to trade lower on Wednesday. However, following the momentum of Asian session, market sentiment is cautious but not bearish. Investors are still looking for further hints from the White House, no matter the latest decision by Trump or Trump’s condition over the coronavirus treatment.
ZFX analyst Jacob Leung said that, we expect dollar is still playing the role of “Cash”. From the move of Tuesday, we can see the only safe-haven is dollar now, or US Treasury, but not gold.
The demand for safe-haven may just last for weeks, as the risk of the economic recovery in the US is heightened.
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.