In our Global Markets Podcast this week, we were joined by Equiti Global analysts Gaurav Kashyap in Dubai and Mark Lee in London. There have been few major incidents in the global markets after the oil price turmoil witnessed in March and April having cooled down.
The podcast comes on the back of a week that was largely green across the board with the NASDAQ, DOW JONES, S&P500 all recording gains. Oil remained strong for the second consecutive week with June futures contracts closing 7 per cent higher in the week. Gaurav says that equity and commodity markets remained resilient on optimism that the worst of the coronavirus is behind us.
The headline for the week was the US non-farm payroll figures showing that in April job losses amounted to 20 million the worst in 30 years with the overall unemployment rate hitting 14 per cent.
Currencies
It was a big week for the Turkish Lira as it slid to the lowest levels against the dollar to 7.2690 and now 20% weaker against the US dollar since January. The weakening currency has forced the Turkish central bank to borrow billions in foreign debt leading to erosion of the foreign reserves and mounting investor concerns on the stability of the Turkish economy.
To further strain the local currency selling pressure, the central bank last week cancelled FX licenses for 3 banks; BNP Paribas, Citibank, and UBS on suspicion of manipulating trade thus weakening the Lira. However, the foreign exchange transactions ban was lifted on Monday 11 after fulfilling their Turkish lira commitments.
US-CHINA RELATIONS
The US-China tensions came to the foreground again last week as Mark believes the geopolitical tensions will add to more volatility in the markets. There has been a blame game on the coronavirus that may lead to more tariffs on China’s end.
WEEK AHEAD
Tuesday – US CPI figures / Resereve Bank of New Zealand announcement
Wednesday – UK GDP figures / Weekly US Crude inventories
Thursday – US unemployment claims figures
Friday – retail Sales release
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