There may be trouble ahead
It is worth reminding ourselves that there are a number of risks around that have the potential to flare up. The market is rightly focused on the re-opening of economies post the first wave of COVID-19, but don’t forget other risks remain:
1. Brexit. Always lurking there somewhere. The UK has until the end of June to agree an extension for the EU-UK trade negotiations.
2. US-China tensions: President Trump loves picking a fight with China. The elections are looming and COVID-19 risks are, rightly or wrongly, fading. This may free up some twitter time for the US President to return to battling China. As long as it is only keyboard bashing the risk should be limited. If words turn to action then the recent risk trade can be stalled.
3. Australia- China tensions. China has taken umbrage with their trading partner over Asutralia’s desire to have an investigation into the outbreak of COVID-19. These tensions could flare up and China has the ability to harm Australia’s economy, so one to watch
4. Euro-relief fund. The German-Franco proposal stills needs all 27 members to agree. The ‘frugal four’ of Austria, Denmark, Sweden, and the Netherlands need to all agree on the terms and they are opposed to grants as opposed to low interest loans
5. And we still haven’t got to COVID-19 second wave outbreak risk. However, the likelihood of a second wave is high at some point in the next 5-9 months.