Global stock markets continued to trade higher through yesterday’s sessions although not to the same extent as the previous day. Asian indices had experienced a strong day but their European and US equivalents couldn’t keep the pace up as investors play more of a waiting game ahead of the key trade talks due to begin today in Beijing. The dollar surged back after US CPI data beat expectations with the Dxy trading back up to yesterday’s highs near 97.20, this move assisted by further pressure on the Euro as news that Spain could be going to the polls earlier than expected hit news wires. Oil continued to gain ground with WTI trading up to $54/b and Brent through $63.5/b and Gold took a substantial dive as dollar buying hit the precious metal.
Asian markets are set for a muted start to the day as all eyes move to Beijing with the much vaulted trade talks set to begin and Chinese trade data due for release. Steven Mnuchin and Robert Lighthizer are both part of the US team and there are reports that they will meet President Xi Jinping on Friday, so hopes are growing that we will see some tangible evidence of a deal coming out of the next couple of days. Investors are once again cautiously optimistic that progress will be made and realistically an extension of the tariff deadline will be seen as a good result in the short term and should spur momentum to the topside. The markets will still be looking at the longer term implications of this meeting and only evidence of a solid deal going forward will dispel the investor caution and global growth fears that have been such a feature of the trading environment over the last year.
Looking ahead at the rest of the day’s trading and apart from the aforementioned Chinese Trade Balance numbers, there’s not too much in the way of data due in the Asian session. MPC member Vlieghe is speaking in the London session and the European Flash GDP date is due. The US session see’s some solid tier 1 data out with both the Retail Sales and PPI numbers due for release early in the session.