Capital punishment
Another day, another volatile session. And with no sign that Trump's unpredictability or the resulting market mayhem will end anytime soon, investors and businesses are getting weary.
The last two weeks have left even the market’s most seasoned veterans gasping for air. “I've been working in markets for 35 years,” Timothy Hext, Pendal’s head of government bonds, told Capital Brief. “I've never seen a market where one person and their pronouncements is pretty much driving everything. It's uncharted territory.”
Exasperation is the prevailing sentiment in the investment community after a dramatic fortnight which has included a multi-trillion dollar global selloff followed by the third largest single day rally for US stocks since the end of World War II — all sparked by Donald Trump’s desire to rewrite global trade rules by imposing, then delaying, tariffs on most of the world.
Given the intense volatility, and the fact that a trade war between the US and China is still very much raging, weary investors could be forgiven for still harbouring doubts about the sustainability of the rebound on Thursday, which saw the ASX 200 rocket 4.5% following a 9.5% rise on Wall Street for the S&P 500.
For his part, Hext is keeping an eye on Japan, one of the largest holders of US debt. There were fears that Japan could respond to US tariffs by selling some of that debt, and that this dynamic may have contributed to the bond market revolt earlier this week — the revolt that ultimately forced Trump to back down.
