Developments in the UK overnight suggest Brexit will be delayed until January 31, with the blessing of the EU. Sterling finished near lows, although UK shares rallied. US profit reporting continues to support investor sentiment, although with 80% of companies still to face shareholders doubts remain and indices finished lower.
Insurer Travellers group snapped the recent trend of better results from financial groups, but 20 of 24 reports overnight beat expectations. Proctor and Gamble earnings were 10% ahead of consensus, indicating a more robust retail environment.
Global sentiment is mixed. Bonds rose overnight, but gold fell and the Japanese yen is unchanged. The mixed results for safe haven assets suggest risk aversion is finding equilibrium. The contrast between European stock gains and modest US losses supports this view, although rallies in crude oil, nickel and iron ore give the edge to growth strategies.
Asia Pacific overnight futures trading further muddies the waters. The resource exposed Australia 200 index dropped slightly, while the more tech and services oriented Hang Seng and Nikkei lifted. A lack of major data releases may see a “bottom up” approach from investors, and individual stock performance could vary within and across sectors.