For the second time in the last four trading sessions global markets have moved significantly without any apparent triggering event. In a reversal of Friday’s “no cause” rally, industrial commodities slumped, share markets were slammed, and bonds and gold lifted as reported nervousness about China/US trade roiled investors. Commodity exposed currencies such as the Australian, New Zealand and Canadian dollars caught the downdraft, although majors like the US Dollar, Japanese Yen and the Euro were largely unmoved.

The exception in last night’s action was the British pound. Better than expected jobs and wages data lifted sterling back towards two month highs, despite the apparent rejection of PM May’s Brexit plan B.

The market swings point to to a key dynamic for 2019. Sentiment and positioning may take over from fundamentals and data releases as market drivers. The intertwining of better (worse) growth and higher (lower) interest rates makes reaction to market related events more difficult to predict. A factor in last night’s sell down may be the extraordinary gains for risk assets since the beginning of the year.

Stronger US corporate reports failed to contain the 1%-2% fall in major North American indices. The pressure continued in aftermarket trading, and US futures have extended the tumble despite stronger than forecast quarterly earnings at IBM. Asia Pacific futures are pointing to more modest opening falls for regional shares, an indication the risk retreat started during yesterday’s local trading session.