Asian markets look set to open lower today after once again trade and global growth concerns pushed stocks lower. Bond markets gained again with the US 10 year yield dropping to its lowest level since December 2017 and German bunds sinking even further into the negative after more dovish comments from the ECB. The dollar gained well across the majors with the Dxy back challenging 97.00 and the pound has dropped on the Asian open as news that the UK’s parliament cannot agree on Brexit alternatives hit the market. Oil dropped as US inventories jumped much higher than expected, WTI now trading just above $59/b having been comfortably above $60/b before the release and Gold continued to fall despite a risk off in equities, now trading back around 1310.
The Brexit rollercoaster continued today as the UK’s parliament confirmed that they cannot agree on an alternative plan for the countries exit from the EU. Sterling dropped on the added confusion and traders will now once again find themselves glued to the news screens for the next updates in the torturous process. It does now seem that parliament will shortly be faced with a decision between the highly unpopular deal that PM May has negotiated or a much more protracted exit run, as they also voted against another referendum and a ‘no deal’ Brexit. Signs of a third vote on the deal may add some strength to the pound as MP’s are indicating that this could now be the best of several bad scenarios in their opinions. Theresa May confirmed overnight that she is prepared to step down if she can deliver Brexit and this may be enough to push the hard line leavers into line behind her deal.
Looking ahead to the rest of todays trading sessions and the initial focus will swing back to New Zealand this morning, after the surprise dovish turn from the RBNZ yesterday we are due for the latest Business Confidence data release and another negative print could put further pressure on the flightless bird. Once again expect the fallout of the Brexit votes to dominate market focus in the London day but investors will also be paying close attention to the latest German Prelim CPI data out early in the session. The main focus of the US trading day will be the release of the Final GDP number but there are also Fed members speaking and expect any comments from them to sway the market, especially while bonds levels remain at such a high focus level.