The picture is becoming clearer - Donald Trump is not just a political wildcard - he is a very real threat to the U.S. and the rest of the world.
Financial Review, 25 August 2019:
A world of deepening political body-blows from Donald Trump to Brexit and Hong Kong are fast turning into genuine economic shocks that threaten to overwhelm central banks' powers, Reserve Bank of Australia governor Philip Lowe has warned.
In a speech to a closed-door gathering of some of the world's most powerful monetary policymakers, Dr Lowe criticised the global rush to lower interest rates as ultimately counterproductive but acknowledged the lack of political stability was making the pressure difficult to resist.
While Dr Lowe refrained from mentioning Donald Trump by name, he referred to Friday's tumultuous market turmoil unleashed by the President's extraordinary attacks on the US Federal Reserve boss, who he suggested may be a bigger "enemy" than Xi Jinping, and a bizarre demand that US companies withdraw from China.
The President's tantrum against Fed chairman Jerome Powell stunned many participants at the annual three-day Jackson Hole symposium over the weekend.
While the central bank and academic participants refused to criticise Mr Trump in public, in private conversations with The Australian Financial Review many were scathing.
One who was prepared to voice his outrage, former Fed vice-president Stanley Fischer, seething at how few members of the central banking fraternity were prepared to challenge Mr Trump, told the forum the greatest threat to the international monetary system was the President.
He was "trying to destroy the global trading system", Dr Fischer said......
On the global political turmoil that dominates headlines, Dr Lowe said it was prompting businesses to shun investment and could end up weighing on their hiring plans.
By contrast, a return to political stability could unleash around the world "a very prosperous period as we catch up with delayed investment and a period of easing financial conditions".
With the US-China trade war set to deepen, as well as ongoing doubts about other flash points, central banks around the world have cut interest rates in recent months.
However, Dr Lowe cautioned that if every central bank acted in the same way, no country would enjoy the normal benefits that rate cuts provided via exchange rate depreciation.
Read the full article here.
The Sydney Morning Herald, 25 August 2019:
The Australian sharemarket is set to follow Wall Street sharply lower at the start of the week after fresh salvos in the trade war between the United States and China over the weekend.
ASX SPI 200 futures point to a decline of 1.33 per cent, or 86 points, when trade opens on Monday morning extending Friday's slide in European and US markets.
“President Trump’s trade war escalated again on Friday…whacking US stocks sharply lower with a flow on to other sharemarkets likely to be seen early in the week ahead,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, told clients.
All major US stock indices slumped more than 2.4 per cent to end the week, led by the tech-heavy Nasdaq Composite Index which tumbled 3 per cent. Major European markets such as the German DAX and French CAC also shed more than 1 per cent for the session.
The steep falls were caused by an unexpected and sudden escalation in the trade conflict between the United States and China with both sides announcing tariff increases on the others imports on Friday......
“At this stage there is still no end in sight and so sharemarkets likely have to fall further to pressure Trump to solve the issue and de-escalate,” said AMP Capital’s Oliver.
The resumption of trade in Chinese markets is also likely to be influential on the performance of Australian shares, dollar and bonds later on Monday.
Australian Stock Exchange close of trading, Monday 26 August 2019:
UPDATE
News.com.au, 26 August 2019:
The Australian share market has been hammered, losing $24 billion after a dramatic escalation of trade hostilities between the US and China over the weekend.
The benchmark ASX200 tumbled at the open but recouped some of its losses by close to finish the day down 1.27 per cent.
The Australian dollar was also hit hard, falling below 67 US cents to its lowest point in a decade but recovered slightly to be buying 67.37 US cents shortly after 4pm.
