Asia Open | Stocks: Recovery signs as markets desensitize to trade war bluster

Market Analysis / 2 Min Read
Stephen Innes / 05 May 2020

Desensitizing to Trump's election bluster, but is it the start of something more sinister?

US equities closed slightly higher Monday, the S&P 500 rising 0.4% after spending most of the session in the red before rallying in the last hour or so of trading. That followed a late rebound in oil prices that saw the first WTI contract close 3.1% higher, while Brent crude closed up 4.4%.

It was an excellent comeback recovery for stocks thanks to the oil complex, despite continued rhetoric from the US administration on China's handling of the coronavirus pandemic and the worrisome Buffett stop out on the airline trade – especially if you were hoping for him to double down.

The market is quickly desensitizing to the trade war bluster, writing it off as political posturing, while the Buffett airline exit is being viewed is more an industry-specific concern and not so bearish for the broader market.

While risk is stabilizing today, try to keep an open mind; with the number of public holidays taking place this week you might not want to read too much into any individual piece of price action as everything is magnified through the lens of thin liquidity.

Nothing beyond the obvious is stirring sentiment today, just a concern that while the world might be past the peak of the coronavirus, the sizzling equity gains since the lows are not reflective of the extent to which the economy faces more fundamental longer-term changes.

But it remains to be seen if yesterday's equity market weakness was a bump in the road or the start of something more sinister as a coronavirus blame-game and looming US Presidential election are a toxic recipe for US-China relations.

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.

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