August started with yet another escalation of the Sino-US trade war tensions, with President Trump signing orders to ban the wildly popular Chinese technology applications TikTok and WeChat. Within the U.S., stimulus talks continue to show little to no progress with House Speaker Pelosi commenting that the White House and the Democrats are still “miles apart”.
Subsequent news from the U.S. were more positive – strong Manufacturing PMI numbers for August, new accommodative policy by the Fed Reserve allowing for inflation and employment to overshoot targets, as well as improvement in unemployment rates helped bolster the equities markets. However, the recent sudden market correction has investors concerned if the ‘whales’ are finally taking profit, suggesting a possible end to the bull run.
Across the Pacific, surprise resignation from Japan Prime Minister Shinzo Abe due to deteriorating health conditions brought USDJPY sharply down but the general expectation is that the government will strive for continuity. In Australia, while the optimism from the Fed Reserve helped with a rally in AUD, its own economic numbers reflected a more sobering picture, and the weaker manufacturing activity and rising China-Australian trade tensions brought the AUD back downwards.