Global financial markets are set to open the week on the front foot with a positive trade deal between the US and China said to be close to completion. Reports that most of the US tariffs on Chinese goods will be lifted along with China reducing levies on American goods has spurred investor optimism and risk appetite. US stock markets closed the week strongly with the Nasdaq up 0.83%, the S&P 0.69% and the Dow 0.43%. The Yuan, Aussie and Kiwi shot higher although the dollar maintained its strength against most of the majors despite President Trump calling for it to be lower. Oil and Gold experienced big drops on Friday and Silver had its worst day of the year dropping over 3% on the day.
It looks like being another interesting week ahead for investors, we’ve kicked off with more positive sentiment on the trade front but we have a plethora of tier 1 data due out, some key central bank meetings and the US Non-Farm Payrolls data to round it all off. There does feel a difference in the market in terms of trade optimism this morning and that seems to be from the increased levels of detail that we’ve got on the proposed trade deal. If we see a removal of all tariffs by the US then this could allow for a more sustained rally for global stock markets and associated risk trades. The implementation of some of the US demands could provide issues further down the track and may lead to more friction between the superpowers, however if a meeting between the two leaders continues to look more likely in the short term for a deal to be signed then expect investor sentiment to rally further though the week.
Looking ahead to today’s trading and it’s relatively quiet in terms of fundamental economic data through the sessions. The focus will be on Australia early in the Asian session with the release of Building Approvals and Company Operating Profits data. Although expect the trade issue to continue to dominate Aussie dollar levels. There’s no tier 1 data due for release in the London or New York time zones and therefore expect sentiment to continue to dictate market direction.