Stock markets experience another tough day yesterday as Geo-political tensions from the weekend continued to exert their influence across the financial spectrum. The US indices struggled the most with tech stocks again particularly hard hit as the ongoing trade situation between the US and China and increased investor concern on regulation led to sharp moves down in major players. Apple was especially hard hit after further reports of production cuts on new iPhone models hit the market via the WSJ. The Nasdaq finished the day down over 3% with the Dow and S&P both just over 1.5% in the red. Currencies were more subdued with the dollar having a mixed day on the majors, Aussie and Kiwi dropped lower in line with their risk profiles as did the UsdJpy but the other majors traded in relatively tight recent ranges.
Markets remain poised for more volatility across risk assets as participants evaluate the latest updates in the various geo-political factors that are dominating direction. Front of mind for most investors is the trade issues between the US and China and what appeared to be a significant escalation in tensions over the weekend, coming a very close second and at probably and even more delicate juncture is the Brexit situation in the UK with any definite move there having the potential to send the pound flying strongly to either side. There are also some big question marks over progress in Europe with the Italian budget and it’s governments economic plans still causing concern for investors. Overall it feels once again that markets are craving certainty on a number of issues before we can see a return of trending markets, unfortunately at the moment it looks like we set for more volatility before this can come about.
Looking ahead at today’s trading sessions and once again it’s fairly light in terms of economic data releases, Aussie traders will be monitoring the latest Monetary Policy Meeting Minutes from the RBA this morning before focus turns back to the sterling on the London open with the Inflation report hearings due before parliaments Treasury committee. Building and Housing data is due out in the US but expect flows to be once again dominated by investor sentiment as the session progresses.