Once again the news wires dominated investor sentiment and market direction over the course of yesterday’s trading day. US stocks have finished the daily firmly in the red after news hit the wires that President Trump is contemplating imposing tariffs on all Chinese imports if his meeting with Chinese President Xi does not go well at next months G20. Elsewhere, Angela Merkel announced that she will quit as the head of her party the CDU as support waned for the ruling coalition, the Euro is trading just above recent lows as we open the Asian session. The dollar has remained bid on the back of its haven status with the Dollar Index once again looking set to hit fresh highs on the year and treasuries were relatively unchanged.
The trade war between the US and China looks set to escalate over the next few months and it’s overall influence on global markets remains as one of the most important factors influencing investor sentiment. Yesterday was a good example of the influence it is exerting on billions of dollars’ worth of stock value, initially the markets had been buoyed as China announced that a fresh tax cut is planned to boost its automotive market, however this move was reversed and superseded by the news out of the states. Investors will continue to monitor the situation closely over the coming sessions and indeed in the run up to next year as the two biggest world economies bash heads and the fall out hits the rest of the world.
Looking ahead to today’s trading day and the Asian markets look set to start the day on the back foot in line with the moves in the US. Investor focus will move to the Australian market early in the day as the latest building approvals are released, this is not normally considered tier 1 data but given recent depreciation on the Australian housing market there should be added interest in this number today. It’s relatively quiet in the London session in terms of data releases but traders will be looking at the US’s latest Consumer Confidence data later in the day before the focus moves over to Canada as BOC Governor Poloz testifies before the House in Ottawa.