Equity markets are on track for one of their worst weeks since last October as trade concerns continue to weigh on investor sentiment. It’s a sea of red across stock indices this morning and things could get worse around lunch time in Asia if the US go ahead and implement tariff increases. US markets recovered late in the day as but still finished well down. Haven currencies continued to perform well with the Yen hitting fresh highs again against the dollar and on the crosses and the Chf moving higher. The Yuan remains under pressure, with UsdCny now trading nearly ten big figures higher than last Friday’s close. Oil remained stable with WTI trading at $61.7/b and Brent back above $70/b and Gold moved higher after Wednesdays drop to trade around 1284 on the Asian open.
Focus, as it has been for most of the week is well and truly on Washington today as investors watch the hours tick down to see if the US goes ahead with tariff increases at midnight or if there is a last minute reprieve. Those who have been watching European football this week may have some increased hope of that last minute turnaround but the market is certainly preparing for a deteriorating relations between the two trading superpowers and expect to see even more of a downturn in risk trades and stocks if we get confirmation later in the Asian session today.
Looking ahead at today’s sessions and there are some other risk events for investors to consider in addition to the trade negotiations in Washington. The RBA’s latest Monetary Policy Statement is due out early in the Asian session and traders will be looking closely at the details after Tuesday’s first live rate announcement in over two years. On the London open the focus will move to the UK with GDP and Manufacturing Production data due out. Key US CPI numbers are due out early in the New York session as well as employment data north of the border in Canada but once again expect the trade issue to dominate sentiment and flow as we move into the weekend.