One news report you may have missed over the last few months have been the growing tensions between Beijing and Canberra. These have come as a response to Australia’s PM who wanted an independent enquiry into the outbreak of COVID-19 earlier in the year. This consequence of this request was that Beijing demonstrated it can impact Australia’s economy if it wanted to by imposing tariffs across a number of different Australian imports. However, despite the tariffs imposed and threatened the general market reaction has been one of indifference. The tariffs have been largely ignore. The consensus view is that this dispute will eventually blow over.

So, until evidence to the contrary, the market reaction does seems to be to ignore the tensions and buy into the dips. According to Bloomberg Australian equity investors are far more likely to focus on the improving domestic economy of the country and its strong COVID-19 response than the dispute between Beijing and Canberra. It seems to be seen as a political move without a real financial bite.

Treasury Wine Estates

Treasury Wine Estates have been hit recently on China’s decision to finally impose anti-dumping duties on a listed Australian Company. However, the market as a whole has remained positive and came close to erasing its 2020 losses last week amid rising coronavirus optimism. Let’s take a look at Financials.

Financials

30% of Australia’s benchmark, the ASX200, is made up by financials. The hope of an improving economy, a strong COVID-19 response, and global growth potential on vaccine optimism have also seen financial surge more than 17% in November. In addition to this there has been a 30% gain in energy stocks. This has helped the ASX reach its best monthly gain on record.

Materials

Materials are the second biggest weighting on the ASX index. A large amount of that is tied up in iron ore majors like BHP Group, Rio Tinto and Fortescue Metals none of which are likely to be subject to duties in the same way that Treasury Wine has been.

So for now the row between China and Beijing can be ignored until it spills over into larger listed Australian companies. It it does spill over watch out for risk off sentiment dragging equities lower.

Learn more about HYCM

High Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

AUD/USD keeping its head above 21DMA at 0.7673 for now

AUD/USD saw downside during Monday’s Asia Pacific and early European session, dropping momentarily as low as 0.7660. The pair broke below an uptrend linking the 28 December 2020 high with the 4, 11 and 15 January lows.

AUD/USD News

EUR/USD is nearing the 1.2000 psychological threshold

EUR/USD corrective decline continues, with the pair approaching a critical psychological support level. Investors await Biden’s inauguration and ECB’s monetary policy decision.

EUR/USD News

XAU/USD fades recovery moves below $1,850, awaits fresh clues

Gold eases from the top of an immediate $10 trading range while declining to $1,837 at the start of Tuesday’s Asian session. The yellow metal took a U-turn from the lowest since December 01 the previous day as the US dollar stepped back after refreshing the one-month high.

Gold news

Stellar awaits a massive breakout but remains inside a no-trade zone

XLM has continued to trade sideways since we last reported about it. The digital asset remains locked inside a tightening range which will eventually burst. 

Read more

US Dollar Index: Immediately to the upside comes 91.00

DXY extends the march north and already trades at shouting distance from the 91.00 barrier, or new 2021 highs.

US Dollar Index News

Forex Majors

Cryptocurrencies

Signatures