In a night of exceptions the Bank of England and the European Central Bank declined to lift interest rates, although the later re-iterated its determination to terminate large scale bond purchases by the end of the year. US CPI for August was slightly lower than expected. The US dollar slid and metals rallied again. Futures are pointing to gains across the Asia Pacific region ahead of an important mid-session data release from China.

Markets responded to improved growth prospects. Government bond generally fell with a few higher yield exceptions, such as Greece. UK shares dropped despite the BoE raising growth forecasts. However most continental exchanges recorded gains and US indices rose. Once again energy marched to its own drum, with crude markets shedding around 2.5%.

The major near term hurdle for healthy markets remains escalating trade disputes. The White House broke its recent twitter silence on the issue, repudiating a Wall Street Journal suggestion that the US is under pressure to make a deal with China. The surge in the Hang Seng and Shanghai indices over the last 24 hours indicates investors siding with the WSJ.

China retail sales (prev 8.8%, f/c 8.8%) and industrial production (prev 6.0%, f/c 6.1%) could dominate today’s close. Any positive signs against a backdrop of deleveraging and investor caution could bring an acceleration of recent gains.