Global stock markets continued trade in muted fashion on Friday as concerns over the upcoming trade talks between China and the US weighed on sentiment. Asian and European indices both struggled to gain any ground again and the US markets finished the week with a mixed result, S&P and Nasdaq just finishing higher with the Dow closing 0.25% down on the day. The dollar maintained it’s recent gains as it’s attraction as a haven currency continued to draw flow, the Dxy currently trading around 96.60. Commodities also had a relatively subdued session with Gold remaining attractive in the current environment and Oil treading water at recent levels as demand concerns pull against supply cuts.
The main focus of this week is certainly the continuation of trade talks in Beijing between the US and China with the market hoping for some positive signs early in the piece to allow optimism back into the trading environment. Analysts will be looking for China to provide a strong enough incentive package for the US to hold off on the tariff front before the March 1 deadline and we’re likely to see an increase in volatility as the week goes on. Robert Lighthizer has warned that a deal isn’t certain and that has been weighing on sentiment over the last few sessions.
On the currency front, some of the majors are back trading at vulnerable levels, notably the Euro and Aussie are both trading near recent lows and breaks of close support levels, could see them open up into fresh downside trading ranges. Sterling will continue to trade in the Brexit wind as this week progresses as once again progress appears to be limited for Theresa May at the moment.
It’s a relatively quiet start to the week today with little in the way of data due out in the Asian session, although the resumption of trading from China will be closely monitored by analysts after having last week off for the Lunar New Year holiday. In the London session the main focus will be on the UK markets with the latest GDP data due out, market expectation is for a flat print on the m/m number but for a 0.3% increase in the quarterly Prelim number. The US session has no tier 1 data due for release but we are set to hear from FOMC member Bowman later in the day, there will still be a focus on Washington as another shutdown seems to be looming with tensions high between the President and Congress.