It was a bit of a mixed day for international markets yesterday, the major stock indices continued to plough higher and once again we saw new highs in the US with the S&P 500 stabilising above 2900 and the Nasdaq closing above 8100. These moves were helped by more trade optimism as US-Canada trade talks were said to be ‘making progress’ and they hope to come to an agreement by Friday. A strong result on US Prelim GDP also helped keep the US markets bid as the 4.2% print beat expectations by 0.2%.
Another positive came from across the pond in the UK where bullish comments on a Brexit deal from the EU’s Michel Barnier helped the pound to surge over 1% higher both against the greenback and on most of the major sterling crosses. The potential is for much more upside for the sterling if a swift deal could be negotiated, there much more in the way of negotiation to be done, but Brexit Bulls – and they’ve been missing from the market for a while now – will be hoping for more positive comments in the coming sessions.
It wasn’t such good news in the Emerging Markets though as Argentina asked the IMF for quicker financial aid and the Turkish Lira continued to fall on further political and economic instability. Investors will continue to monitor the EM space as we move through the Asian session as once again several APAC EM’s trade closer to recent lows and look vulnerable to a break out.
The Aud took another hit as Westpac once again announced an independent rate hike on it’s variable products with the other members of the big four expected to follow suit. This pushed expectations of an RBA hike even further down the road and Aussie bulls will be hoping for a positive result from today’s Capex number to lift the currency.
Looking ahead to today’s trading sessions and Asian markets are once again set to follow the US lead and start on the front foot. Apart from the aforementioned Capex numbers is another quiet day on the economic data front until the Canadian GDP release in the North American session. Investors will continue to monitor the various global trade issues closely with Nafta (part 2), Brexit and the ongoing China-US situation all very much in focus.