by Connor Darrell CFA, Assistant Vice President – Head of Investments
Global equities advanced considerably from week-ago levels as the “great reopening” continued in earnest. Consumer activity has begun to show signs of picking up, and images of large crowds celebrating the holiday weekend in several popular vacation destinations provided visual proof. However, while encouraging from an economic activity standpoint, the images have created a sense of unease for many leaders and have highlighted how difficult it will be to achieve a measured reopening.

The market rebound has continued to remain resilient in the face of a variety of geopolitical challenges. With each passing day, the durability of the US-China trade deal faces tougher tests as the relationship and trust between the two superpowers continues to erode. Not only has the origins of the virus created a growing sense of mistrust, but news that China will impose new national security restrictions in an attempt to suppress ongoing protests in the city of Hong Kong sparked a slew of international condemnation last week. U.S. Secretary of State Mike Pompeo stated that the city of Hong Kong no longer possesses autonomy from the central Chinese government, an issue that could further jeopardize ongoing trade discussions.

Domestically, geopolitical concerns have increased in recent weeks as well, with footage of civil unrest in cities across the country going viral. The relative stability of financial markets compared to the mounting tensions both at home and abroad have underscored the contrast between “Wall St” and “Main St”, and have caused many to continue questioning the strength of the market’s recovery. From an investment standpoint, this dynamic continues to underscore the divergences that can occur between financial markets and geopolitics and serves as further evidence of the difficulty of market timing.