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Re-start rally

Re-start rally

The re-start of trade talks between China and the US announced over the weekend is expected to drive shares higher today. In early trading this morning US futures, crude oil and commodity currencies are higher in a shift towards growth exposures. Bonds and gold are under pressure as investors move away from safe havens.

There are differences between the announcements from the world’s largest economies, and little detail is available. The White House reported an agreement for China to buy more US agricultural goods, but Beijing cast this as aspiration. Huawei may have regained access to some US markets, and any tariff increases are off the table for now. Reports of bullish expectations are at odds with the seemingly tepid advance in trade relations.

Australian traders are expecting an interest rate cut from the Reserve Bank at tomorrow’s meeting. Money market trading reflects a 68% probability of a move tomorrow, and an 80% likelihood of a cut by August. Despite these expectations the Australian dollar is trading back above 70 US cents, and the New Zealand dollar is holding above 67 cents as commodity traders lift exposures.

Bitcoin is lower this morning although higher levels of volatility could see it finish the day almost anywhere. Having traded an almost $4,000 range over the last four sessions the pressure this morning indicates the recent rally relates to its appeal as an alternative asset in troubled times.

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