Equity markets continue to trade with the ebb and flow of global trade concerns as fresh news hits the markets. Last night we heard a slightly more conciliatory message from President Trump which prompted a rally in equities and risk assets before Larry Kudlow declared that the President was not backing down on China and the share market tumbled once again. Tech stocks leading the charge to the downside with the Nasdaq closing down 1.54% The dollar gained across the board with the Dxy now punching up again towards recent highs near 95.50, the other majors turning down, EM’s once again looking particularly vulnerable and of course the Cny continued on its recent PBOC assisted move to the downside. Influencing some of these moves for the EM’s and Yen was another move higher for the Oil price as once again US inventory levels slipped.
We’re certainly not getting a consistent message from the US administration and this is creating further uncertainty across the investor landscape as analysts struggle to predict the impact of what could or should happen with regard to various trade considerations as well as deal with the real knowledge that we have in terms of fundamental economic data. Central Bankers are confirming their concerns to a greater level now with BOE Governor Carney, BOC Governor Poloz and RBNZ Governor Orr all voicing their concerns on trade overnight. Most notably for Orr at the RBNZ announcement this morning where we heard the expected dovish rhetoric after the even more expected ‘no change’ in rates.
Looking ahead to todays trading and it’s relatively quiet again on the economic data release front in the Asian session. In the London session we have the start of the EU Economic Summit and this will probably provide some headlines but probably the most important data release of the week comes out in the New York session in the form of the latest Final Quarterly GDP number for the US. Market expectation is for a +2.2% print and the market will be monitoring this very closely as will the FOMC.