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Currencies, commodities, shares diverge

Asia Pacific traders may be in for a head scratching session today. In overnight action the US dollar softened as optimism about a China/US trade deal increased. This scenario generally supports commodity prices, but instead base metals fell and crude oil and iron ore plummeted. Despite the commodity pressure, the Australia dollar rose, although share futures are pointing to opening losses in Sydney, and a usually supportive lower Japanese yen is trading alongside flat Nikkei futures.

A key question for regional markets is whether mainland Chinese stock indices can add to yesterday 5% to 6% gains. The US president may have played a key role by tweeting:

“China Trade Deal (and more) in advanced stages. Relationship between our two Countries is very strong”

However in an even-handed approach the president’s OPEC related tweets preceded a 3% rout in crude oil prices.

Disappointing company results could also hit regional indices. Spark Infrastructure (NZ) reported a surprise loss, and both Bingo Industries and Speedcast International missed estimates. As the reporting winds down an overall miss on earnings growth may also affect trading.

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