Market Brief, Thursday, 20th of August, 2020
The major US stock markets traded lower in the aftermath of the FOMC minutes which were less accommodative than expected. The major indices retreated from their previous record highs with the S&P lower by 1.12%, and the Nasdaq lower by 1.45%.
The FOMC minutes were mixed in meeting expectations. While the ongoing framework review was mentioned, there was no mention of the timing of its release. There was also no clear consensus on the form of forwarding guidance with outcome-based guidance prevailing rather than calendar-based which was expected.
Asian equity markets traded lower following weak earnings from Australia and a firmer yen in Japan. ASX and Nikkei were lower by 1% and 1.1% respectively while in China the Shanghai composite traded lower by 1.1%. The Hang-Seng underperformed, trading lower by 2.2% after the US State Department suspended or terminated bilateral agreements with Hong Kong.
Looking at the FX space, the dollar was the outperformer on a less accommodative Fed with the dollar index trading as high as 93.10. The dollars counterparts traded lower against it with the EURUSD and GBPUSD retreating to 1.1830 and 1.31 respectively.
In the energy space, Crude oil was generally muted following a lower than expected draw in Inventories. WTI pulled back from 43 $ per barrel to around 42.50 with Brent trading around $45.
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