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Markets on the brink

Risk positive moves in markets on Friday night appeared to defy the deterioration in trade discussions between China and the USA. European and American shares rallied along with industrial metals. However Asia Pacific markets are set for a more uncomfortable session today after tweets from the US president over the weekend.

Investors are in two minds over the newly introduced tariffs. Some see them as a bargaining chip in a fruitful negotiation, while others consider them a sign of a breakdown in talks and a potential drag on global growth. Pessimist have the upper hand this morning, with energy prices and US share futures tumbling. Tweets over the weekend urging buyers to turn to US goods and welcoming “Tens of Billions of Dollars in Tariffs from China” point to a more protracted trade dispute than priced in end of week trading.

Commodity currencies are under pressure, with forex traders leaning towards safe haven in the US dollar and Japanese yen. Bonds and gold are in favour.

Uber shares debuted on Friday night and followed Lyft’s lead lower. In an unusual move for an IPO greater than a billion dollars Uber stock finished down more than 7.5% after the first day of trading. The IT sector underperformed the index, and the pressure may see higher growth market darlings lead any down moves today.

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