The US Federal Reserve held interest rates steady at the meeting concluded overnight. However the wording of its post meeting statement changed. It now describes the US economy as “strong”, rather than “solid”. Bonds sold off, the US dollar rose and shares came under pressure. The market action and the rejuvenated spectre of trade wars are pointing to a tough day for Asia Pacific investors.

Copper and oil slumped. A White House suggestion to hit $200 billion in Chinese imports with a 25% tariff accelerated a stronger dollar inspired sell down. Gold hit a 12 month low. In an unlucky co-incidence Rio Tinto reported overnight, and despite lifting underlying profitability by 12% its shares dropped 4%. The weakness comes despite a stronger US reporting season. With around 70% of the top 500 reports in sales on average are up close to 10% and earnings up more than 24%.

With little data due and no Australian companies reporting today there may be little to countermand the negative sentiment. Markets in China fell around 1.8% yesterday, and may do better today given the pre-emptive moves. Slightly lower local currencies may also provide a modest offset.