Headlines on trade negotiations and tariffs continue to dominate market sentiment as we progress through the week. Equity markets had a mixed day as the market waits for clarity on the trade negotiations starting later today in Washington, Asian indices had struggled earlier in the day but we saw a more mixed bag in the European and US sessions, the major US indices closing the day with the Nasdaq down 0.26%, the Dow down 0.16% and the S&P flat. The Yen remained bid throughout the day both against the greenback and on the crosses as currency traders continued to look for value in haven trades and the dollar continued to edge higher. Gold had continued to gain ground in the risk averse environment but dropped hard off of resistance around 1290 to close the day back around 1281.
Investors will continue to monitor the news wires for updates on the trade negotiations between China and the US as the situation heats up with talks commencing later today. Concerns are still high that both sides will harden their stances, tensions will escalate, tariffs and counter tariffs will be enforced and markets will come under strong downside pressure. Comments last night from the Oval office indicate that President Trump would like to have his tariff pie and eat it with a side order of trade deal, but the Chinese team will be unlikely to allow this to happen. There is of course the chance that this weeks developments are still negotiating tactics and we’ll see some pull back from both sides by Friday and hopes of a deal in the near future re-emerge, if this was to occur expect a strong relief rally into the weekend.
Looking ahead to today’s trading and there are some scheduled economic data releases due to take the focus away from the trade dispute. Chinese CPI and PPI numbers are due out in the Asian session today with the headline CPI number expected to show a slight increase at 2.5%. It’s relatively quiet in the London session but early in the New York day we have both the Canadian and US Trade Balance numbers as well as the US PPI monthly print alongside comments from Fed Chair Jerome Powell.