Donald Trump is set to travel to China this week to meet with President Xi Jinping.
The US president will arrive with tech leaders, including Elon Musk and Tim Cook, in order to discuss trade, technology, and the ongoing conflict in the Middle East.
Milford Asset Management expert Jeremy Hutton explains what this could mean for the market.
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Episode Transcript
Jeremy Hutton Milfed Asset Management is with us Alo Jeremy.
Speaker 2 (00:03):
Good evening, Heather.
Speaker 1 (00:04):
Now, what are the financial markets expecting from that Trump
meeting in China?
Speaker 2 (00:10):
Yeah, Trump President g meeting is a heavyweight bolt at
the best of times, but the stakes are a little
bit higher this time for the global economy, particularly on
the Iran subject. Now, financial markets, there is a little
bit of an interesting disconnect happening at the moment. I mean,
you've got the equity market booming in the US, but
oil prices are still going up and US bond yields
(00:33):
are increasingly getting into nervous territory. So normally these react
inversely to one another, so potentially something has to give
here soon. The equity market, I mean, it's taking the
view that the Trump G meeting will be positive for
some of the differences in Iran and perhaps leading to
(00:53):
some sort of de escalation, but in my view it's
still unlikely to provide a clean solution to the crisis.
And then the bond market, it's probably more reflecting the
reality and what we're seeing in the energy market and
the messiness of higher inflation and that potentially sticking around
for a while. So the AI boom rages on, but
(01:14):
the wider market and global economies will be taking their
next queue from the outcome of this meeting on Friday morning,
New Zealand time.
Speaker 1 (01:22):
Okay, now, talk to me about the Aussie budget. That's
created some big moves on the stock market over there.
Speaker 2 (01:26):
Isn't it. Yeah, it has and there were some big,
big changes in the Australian federal budget, and in particular,
the market focus has been on the removal of the
negative gearing for investment properties and we did see some
dramatic moves on the exchange today, especially a sell off
in real estate exposed sectors and the banks as well.
(01:48):
But Commonwealth Bank or CBA, that has captured the attention
and unfortunately today it lost the prize of Australia's largest
listed company and the share price was down over ten
percent today and that was a decrease of over twenty
five billion Australian dollars. What happened here? You know, CBA,
it is the most the bank of most exposed to
(02:09):
the investor segment and that's expected to be hit pretty
hard with the negative negative gearing removal. So now BHP,
the very large iron ore Minor has now retaken the
most valuable company spot on the Aussie Exchange.
Speaker 1 (02:23):
All right, now, what's going on in the UK with
the financial market there and Kiir Starmer.
Speaker 2 (02:29):
Yeah, posts those UK regional elections and the corresponding Labor
Party instability. The main impact has been on the on
the bond market. UK bond market or gilts as they're nine,
as the ten year guilt that's risen steadily above the
concerning five percent level, and in fact it's it's higher
than when I had a bit of a meltdown post
(02:50):
that Liz Trust budget a few years ago. But effectively,
the market views Starmer and Chancellor Rachel Reeves and their
fiscal rules as as a stabilizing force for the bond
market and sort of any views potential move Leftwood in
the Labor Party or the loosening of those fiscal rules
could be very negative for the bond market. But the
(03:11):
equity market in the UK, the S and P five
one hundred, sorry sorry the FOOTS one hundred had a
very strong year and twenty twenty five, despite plenty of
negative news out of the UK, was up twenty one percent.
But I expect a few wobbles potentially if that political
instability drags on. Ye.
Speaker 1 (03:29):
Good stuff. Hey, thanks for running us through at Jeremy
as always Jeremy Hutton, Milford Asset Management. For more from
Heather Duplessy Allen Drive, listen live to news Talks. It'd
be from four pm weekdays, or follow the podcast on
iHeartRadio
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