While there is no “all clear” on market concerns, investor sentiment pulled back from extremes overnight. The decision by the Hong Kong government to withdraw its extradition bill, and the increasing likelihood of the deferral of a no-deal Brexit, soothed nerves. Stocks rallied alongside copper, oil and other industrial commodities.  However ongoing support for gold and bonds reflect continuing doubts.

Currency markets illustrated the shift. The safe-haven Yen fell, and Sterling and the Euro rallied. The US dollar played a passive role as markets wait for the next trade tweets to drop. The US President took aim at Europe’s “most protectionist policies” and China’s carbon emissions, but gave no news around the key trade dispute with China.

This makes Asia Pacific markets particularly sensitive to headline risk, from either Beijing or Washington. Some analyst are pointing to a strengthening Yuan as a possible indicator of a re-start of negotiations. If Beijing announces a date for a meeting risk appetites could lift further.

In the meantime investors have plenty of data to chew on. German factory orders and industrial production, China trade numbers and US durable goods and non-farm payrolls are all due in the next 48 hours. Markets are likely to focus on evidence of trade dispute impacts. Any positive surprises could have a disproportionate impact given proximity to sentiment extremes.

Australian shares are set for opening gains. Futures markets are modestly positive. Both Rio and BHP rallied more than 3% in overnight trading, and the local resource listings are in the spotlight today.