Shares in Europe and the US rose overnight after China offered conciliatory gestures on trade and investment. The White responded in kind, as well as calling on the Federal Reserve to lower interest rates. Currencies and bonds gave a muted response ahead of the European Central Bank’s meeting tonight.

China exempted US $1.65 billion worth of goods from tariffs, and eased investment requirements. In return the White House deferred tariff increases due on 1 October to 15 October. The quantum and nature of the changes mean they are more symbolic than substantial, but were still received well by investors.

Bond markets steadied after a two-session rout. The ECB is widely expected to cut interest rates tonight, but the potential re-introduction of funds injection is an important uncertainty. The broad spread of expectations could lead to significant market reactions, with the Euro at the core.

Asia Pacific markets are tipped to open higher in light of the overnight action. Energy stocks could face pressure after reports of a US led easing of sanctions on Iran belted crude oil prices. Evidence of further economic stimulus in China is lifting iron ore prices, and the resource heavy Australia 200 index may outperform today.