Three Challenges Ahead of Investors with Markets Awaiting Next Trigger

Most commodity prices have greeted a growth amid economic recovery and stimulus measures, but the next trigger is still pending.

Recently, most commodities on global markets have been traded at a high level because of the weak greenback, the declining U.S. and global stock markets, and the rally in China's economy.

Although these factors have supported the prices, current markets are still in lack of driving forces without a new trigger.

Several questions have left to market participants, calling for their close attention and consideration. When will the U.S. propose a new round of stimulus checks？ Will the Sino-U.S. tensions be eased？ How deep are the global economic effects of COVID-19？

COVID-19 In India (As on 19 August, 2020, 08:00 AM)

The most uncertain factor for investors is the U.S.' next stimulus checks. Tough negotiations between the government and Congress didnt help to find common ground on the issue of additional fiscal stimulus. The Fed officials worried that the delayed measures may encumber the country's economic recovery.

At the same time, a political stalemate arose from the new stimulus package has hampered the DXY, making the market uncertainty evident. However, investors generally see the proposed measures in an upbeat way, which is reflected in the U.S. stock markets' enduring gains.

The next focus is Sino-U.S. relation. The two powers have been at loggerheads over various issues and retaliated upon each other. Heightened tension is worrisome, but there are no negative effects for the moment, especially on commodity prices.

In addition, global cases of coronavirus is still in the steep ascent. Sharp rise in cases again found in some European and Asian countries, Australia and New Zealand. Such rise impeded the economic recovery of these countries, forcing them to impose some form of restrictions.

Generally speaking, global stock and debt markets have nudged slightly and found some stability since the latter half of the year, while commodities have turned around this year's early setback and embraced a drastic rally, with EUR, GBP and AUD extending their gains. It is partly out of the economic recovery, and partly because the stimulus packages have injected liquidity into financial markets. Even so, a trigger is in urgent need for markets to keep the upside.

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