In confirmation that trade issues remain at the heart of market thinking, a single comment from president Trump reversed sentiment in overnight trading. Asia Pacific markets are set to regain ground lost yesterday after US indices finished firmly in the green.
The European session saw shares drop and pressure on industrial commodities. The pound slid after the British Prime Minister urged his opponents to either support a no-deal Brexit or take the issue to the people in a snap election. The lack of a clear path forward for the UK’s disengagement saw sterling shed 1.5 US cents.
However as Europe closed and the US opened, president Trump told reporters that a deal with China was possible, and may happen “sooner than you think”. This was enough to turn the risk tide. Bonds yields rose, gold fell, and shares and industrial metals rallied. Better than forecast US housing activity backed the shift in sentiment.
A stronger US dollar could be a brake on regional investor enthusiasm today. Anticipated declines in local currencies may keep global investors on the sideline. A 2.5% rally in iron ore prices could mean outperformance for the Australia 200 index.