Geopolitical Tensions & Second Wave Fears Send Stocks Lower
Fiona Cincotta June 17, 2020 7:31 AM
Geopolitical tensions in Asia, combined with fears of a second coronavirus flare up in China are weighing on risk sentiment, overshadowing hopes of a cheap covid-19 life saving drug.
Investors have turned cautious overnight as geopolitical tension in Asia, combined with fears of a second coronavirus flare up in China are weighing on risk sentiment, overshadowing hopes of a cheap covid-19 life saving drug. Asian markets moved lower, European bourses are pointing to a move southward on the open, meanwhile safe havens such as the US Dollar and gold are trading mildly higher.
News of a major breakthrough in the fight against coronavirus has failed to bring in a strong reaction in the market. A low dose, cheap steroid dexamethasone can hep save lives for those patients on ventilators. This is a positive step forward,which is helping to underpin sentiment.
In the UK, the FTSE looks set to fare marginally better than its European peers. Hopes that Boris Johnson could scarp the two-meter rule soon, in addition to optimism surrounding trade deals with Australia and New Zealand are helping to underpin sentiment.
GBP Gains As Inflation +0.5% yoy in May
The Pound has unexpectedly spiked into positive territory versus the USD following the release of some pretty grim inflation data. Consumer prices were flat month on moth in May, however, on an annual basis inflation increased a lacklustre 0.5%, down from 0.8% but in line with expectation. In a classic glass half full approach, the Pound is taking solace from the fact that inflation wasn’t worse than forecast.
This reading is unlikely to prompt the Bank of England to cut rates when it gives its rate announcement tomorrow. An additional £100 billion in QE is already priced in.
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