The new week on the financial markets begins with a reminder that old conflicts will continue to rule the world for the time being.
The US-China relationship is gradually replacing the coronavirus as the most hotly discussed topic on the markets. The two countries continue to exchange diplomatic blows, this time by announcing reciprocal sanctions against officials from the other country. Moreover, the US is also working on a list of Chinese companies that violate its national accounting standards, which can potentially be removed from US-based stock exchanges.
In addition, the Chinese authorities are still taking advantage of the new security law in Hong Kong and have been making high-profile arrests of politicians and entrepreneurs who seem to have a close relationship with the West.
There will be a video conference between the chief trade representatives of both the United States and China this week, but at this point investors are uncertain whether the meeting will make things better or worse.
Besides the issue with China, Donald Trump is also trying to deal with a domestic crisis, namely the inability of Congress to agree on a new stimulus bill. We are now entering the second week of cut unemployment benefits for the millions of jobless Americans. President Trump tried to go around Congress and issued an order to get the benefits flowing again, though this time they will be smaller in amount, and partially funded by state budgets.
The lack of clarity regarding stimulus packages in the United States is causing more chaos than usual on the stock markets. Today we are seeing a slight recovery in the S&P and Dow Jones indices, but the Nasdaq 100 is in the red again.
The oil market is faring much better today, thanks to new estimates from Saudi Arabia regarding a potential increase in the demand for oil now that industrial production is recovering in China and the EU.
This pushed the price of the Brent crude up to $44.83, while the WTI climbed to $41.80 per barrel.
