Global investors drifted away from risk assets overnight as geopolitical concerns persist. Fear of a potential US Government shutdown could be one factor. Most major US equities plummeted ahead of the FOMC meeting and a possible interest rate lift on Thursday.

Oil markets nosedived as the idea of potential oversupply and global economic concerns informed investor thinking. The US crude oil price fell as much as 4%, breaching $50 for the first time in 14 months. Time will tell if the heavy sell-off in risk assets was a result of an anxiety attack or a strategic repositioning based on a contingency plan. 

The disdain for risk assets supported traditional boltholes. Gold prices bounced strongly, trading above USD$ 1245.00. The Japanese Yen strengthened sharply and the US 10 year bond yield dropped through 2.85%. Nonetheless, the US dollar declined and lifted some G-10 currencies. The Euro gained the most and the Pound edged higher. However, the Australian dollar remained under pressure on lower commodity prices. The mixed signals in currency markets suggests investors could be selective due to geopolitical factors. The Brexit deal, the Italian budget issue, and the protest in Europe are all potential factors that could influence investor behaviour.

The negative lead from overnight market action could weigh on Asia Pacific equities today. The lack of major economic data does not help. Futures market are pointing to opening red for the Japanese, Shanghai, and Australian stock markets. Analysts will focus on the speech of President Xi in Beijing today, marking the 40th anniversary of the “Open Door policy” that aimed to attract foreign investments. Any contents relating to change in trade policy may boost investor buying.