Global financial markets continue to struggle to rally as various Geo-Political concerns weigh on investor confidence. Currencies took a hit last night as the pound suffered on further concerns over Brexit and the future of PM Theresa May and the Euro took a dive on more concerns over Italy’s budget, both down nearly a big figure on the day against the greenback. The dollar index is now trading back up around 96.00 and ‘risk on’ trades look vulnerable as we start the Asian session today. The standout performer yesterday was probably Chinese markets as once again their stock markets surged to the topside after further promised government support to the private sector hit the news wires. The CSI 300 finished the day up 4.32% with Hong Kong’s Hang Seng also having a good day up 2.32% at the close.
Moving into the start of trading today and investors will continue to monitor the news wires carefully, the situation in the middle east is still looking very vulnerable with the US administration set to review all its information on the Jamal Khashoggi case and Turkish President Erdogan also due to air his governments findings. Expect further volatility for Saudi assets and Oil ahead. The Brexit situation appears to be coming to a head in the UK with some participants saying a deal is 90% done with just the Irish border a sticking point whilst across the divide others are pushing for a second referendum, the next few weeks seem crucial and sterling looks set for more swings and volatility ahead. European markets will continue to monitor the Italian government and the EU’s responses with regard to it’s budget but with the latest ECB meeting approaching expect Euro traders to focus more on comments in the press conference after the meeting (no rate move firmly expected) for the next big move in the single currency.
The main focus for the Asian session today will be the Chinese markets as investors will be very keen to see if they can maintain the stellar run that they’ve experienced over the last couple of days, with the rest of the world looking much more pessimistic in the current environment there could be a firm correction on the cards. It’s very quiet in terms of fundamental economic data releases today but we are due to hear from some key central bankers, the RBA’s Assistant Governor’s Debelle and Bullock are due to speak in Sydney today and we hear from the MPC’s Haldane and Carney during the London and New York sessions with the FOMC’s Bostic also chiming in late in the day.