Global markets took a step back into positive territory again over the course or yesterdays trading as the recent see-sawing in investor sentiment continued. US markets were buoyed by strong earnings posts from Goldman Sachs and Bank Of America with the major indices finishing once again in the black. The Brexit saga continued in the UK with PM Theresa May’s government surviving a vote of no confidence as expected this morning which no paves the way for fresh cross party talks and a possible extension of the March 29 deadline and of course a multitude of other possibilities. The dollar gained on the day against most of the majors with the Dxy finishing the US session up around 96.10 and Oil continued to trade to the top of its recent range with WTI above $52/b and Brent over $61/b.
Investor sentiment has been swinging on an almost session by session basis this week and it seems to reflect the confusion that is still permeating the global markets as we move into the new year. Contributing factors appear to be cancelling each other out on a daily basis, on one side we have a much more dovish Fed which is adding to optimism along with positive talk on the on going trade issues between the US and China and on the other we have a plethora of geo-political issues that are remaining unresolved including clarity on the aforementioned trade war, a continuing US government shut down and a raft of relatively poor data. The market is craving some clear guidance on a number of these points and until we see a clear way forward it seems we’re in for more volatility and frequent swings in risk appetite.
Looking ahead to today’s trading and expect sentiment to once again dominate flows with little in the way of top tier data releases due. Asian markets are set to open on the front foot but once again keep a sharp eye on the Nikkei for early divergent moves and the news wires for any fresh updates out of China. The G20 starts today in Tokyo and we’re due to hear from BOJ Governor Kuroda early in the afternoon as it opens up, but don’t expect as much market impact from this meeting as we got from the last one when Presidents Trump and Xi got together. The London and US sessions are relatively quiet in terms of fresh data releases, however expect the news wires to be running hot on all the relevant issues that are continuing to influence market direction.