Overnight trading was steady ahead of an anticipated step forward in trade negotiations at this weekend’s Group of Twenty meeting in Osaka. Conflicting reports and moderation of optimism saw modest reversals that indicates closing of positions. Bonds were mixed and traders favoured major economies. European and US shares traded disparately on thin volumes. The US dollar continued its hover above recent lows.

Volatility markets are illuminating. Despite calm, low-volume trading the VIX over the S&P500 rose again last night, and is now above 16%. This is a significant increase on the April low near 11%, and shows investor fear is on the rise.

Asia Pacific share markets outperformed their global peers over the last twenty-four hours. Both the Nikkei and the Hang Seng recorded solid gains yesterday, with a change in outlook for regional currencies a key driver. The European Central Bank and the US Federal Reserve signals on interest rate cuts make local currencies more attractive.

The end of the financial year in Australia makes predicting the outcome of today’s trade more difficult. Tax regulations give incentives for some classes of investors to sell out of losing positions, increasing pressure on already beaten down stocks. This selling interest could be offset by fund buying as managers finesse monthly, quarterly and annual performance.