Global stock markets had another mixed day yesterday as investors look for fresh impetus and geo-political issues continue to weigh on sentiment. An inconclusive early finish to the US-North Korean summit added to a weak Chinese data print in the Asian session to put traders on the back foot and that sentiment flowed through to the other sessions. US indices closed once again in the red despite a stronger US GDP result and more positive comments on a Chinese trade deal from both Larry Kudlow and Steven Mnuchin. The dollar gained ground on the day with the Dxy bouncing off a low under 95.90 to finish the US day over 96.20. Gold had a whippy day, originally rallying up through 1325 before taking another hit later in the day, closing the US session down under 1314 and Oil maintained it’s recent levels.
Market dynamics seem to be changing on an almost daily basis at the moment, comments from some of the US’s main representatives were overwhelmingly positive with regard to a trade deal with China last night and only a couple of weeks ago that probably would have led to a significant rally in risk appetite and strong gains across the stock markets. There have also been some other break downs in traditional correlations over the last few sessions, notably some of the haven trades that we are used to seeing are haven’t played out as investors would normally expect with both Gold and Yen taking hits when sentiment is on the back foot. This could be that start of a change in the sentiment play which we’ve become so used to recently, with the ‘big dollar’ and fundamentals starting to dominate flow and direction or just a couple of days shake out, only time will tell but certainly traders are starting to notice the difference.
Looking ahead to todays trading and the Asian sessions main focus will be the release of the latest Caixin Manufacturing PMI number, investors will once again be watching for any slowing in the Chinese economy and will react accordingly. We are also set to hear from Jerome Powell during the Asian time zone and although it’s in a slightly more informal setting that the Senate, expect similar rhetoric from the Fed Chair today. We have a raft of Manufacturing PMI numbers due out today and that continues into the European session with the UK’s likely to get the most attention, also we have the EU’s CPI estimate shortly after. Into the New York session and focus will initially move north of the border with the release of the Canadian GDP number before investors look back to the US for the latest ISM Manufacturing PMI release.