Global stock markets experienced a stall in their recent rally overnight as US Retail Sales data had it’s worst drop in nine years and concerns remerged on trade talks in China. Reports from Beijing that the two sides are struggling to come to much of an agreement on the key issues are weighing on sentiment again and markets are reacting accordingly. Stock indices closed down in most of the financial centres and the risk trades declined, although there was some disconnect of recent correlations as the dollar fell in line with the data rather appreciating as a haven asset, the Dxy now trading at 97.00. Gold remains a strong barometer of investor sentiment and gained well on the day finishing above $1312 having dropped as far as $1303 earlier in the day.
Investor sentiment continues to drive markets as expected this week and the focus will remain on Beijing as the trading day progresses. In addition to the ongoing trade talks, Chinese CPI data is due out today and a poor print could result in further pressure on an already sensitive market. Traders will remain focussed on news wires up to the final bell today as key issues continue to remain volatile, the US – China trade talks are still top of the list, but the potential for a US government shut down remains and although this looks likely to be avoided at the moment any twist in the situation could also send markets spiralling.
Looking ahead to today’s trading sessions and as advised above China will be the main focus for the Asian session both on the news wires and from a data perspective. Retail Sales numbers are due out of the UK in the London time zone and a poor result there could put further pressure on a Brexit beleaguered pound. It’s relatively quiet from a data point of view in the New York time zone but those Geo-Political issues will continue to influence markets and the propensity for sharp moves in reduced liquidity will increase as the day progresses.