Stock markets rallied strongly on Friday as optimism grew that a trade deal may be possible between the US and China with talks set to continue in Washington this week. Reports that both sides had reached a consensus spurred the move and the US indices finished the week strongly with the Dow leading the way up 1.74% on the close followed by the S&P and Nasdaq, up 1.09% and 0.61% respectively. The dollar depreciated with the Dxy now trading under 97.00 again and haven flows fell off across the other currencies. On the commodities front, both Oil and Gold appreciated strongly, Oil to its highest levels this year, Brent and WTI both advancing over 2% on the day and Gold back challenging it’s monthly highs north of 1320.00.
It looks set to be another interesting week ahead for financial markets, the Sino – US talks move to Washington and once again investor hopes will be for some more clarity and detail on the current positive rhetoric. Averting a tariff increase on March 1 is the initial goal, however analysts will be looking for more agreement from both sides on key issues before longer term optimism will enter the market and allow stronger long term trends to develop. We have some significant tier 1 data due for release and a plethora of central bank action with minutes from both the RBA and Fed due out as well senior members set to speak including no less than nine FOMC representatives.
It’s set to be a relatively slow start to the week today with a dearth of fundamental economic data due for release and US markets having the day off to celebrate President’s Day. Expect sentiment to dominate market moves with Asian markets looking to open on a positive footing following Friday’s positive session in the US. Traders will continue to monitor news wires for updates on the key issues and while the news is positive expect risk trades to remain bid.