Global financial markets experienced significant volatility this week, especially in the currency and equity markets. The EUR/USD currency pair continued to keep an upward tone above the 1.1400 level, but didn’t generate a sustained upside investor interest. Tesla Inc. (TSLA) was in the very definition of heightened volatility triggered on Wednesday. While the stock initially exploded past $332, a massive rotation hit just as quickly that saw its shares drop to well under $274 by late afternoon session.
On Monday, US and Chinese trade representatives met in London and were said to be closing in on a deal. Whether the Committee wants to admit it or not, choppy liquidity conditions reigned over this gathering. More than its symbolic power, it launched formal negotiations to reduce starting trade disputes. The talks moved into a second round on Tuesday, a strong indication from both governments that each country was serious about finding areas of agreement.
The EUR/USD was steady above the 1.1400 level for the better part of Monday. This stability did not translate into excitement from the investment community. Economic analysts warned that global trade dynamics are creating enough uncertainty to stifle momentum. Worryingly, they pointed to economic indicators as a make or break factor.
Alongside this action in the currency markets, TSLA stock saw great fluctuations. After listing above $332, the stock then experienced an alarming 17% dump, shaking investor confidence and causing panic surrounding the company’s near-term prospects. As of late Wednesday afternoon, TSLA was trading under the $274 threshold. This dramatic drop opened the door to conversations around what is driving stock price increases and decreases.
The AUD did extraordinarily well as a commodity currency in holding above 0.6500. This stability played out as the bruising trade war between the US and China, for all intents and purposes, transferred to agriculture. The recent stability of AUD/USD during a time of high and increasing global uncertainty suggests that investors have confidence in Australia’s economic outlook under either scenario.
Market observers are now focused on the forthcoming Australian confidence data. Such information would help shine a spotlight on economic sentiment within the region. As trade discussions extend and economic indicators are released, investors will be closely monitoring how these factors influence both currency pairs and stock performances.