Bonds, gold and cash are in favour as the arrest of a key Chinese executive in Canada continues to inflame trade tensions. Weaker US jobs data is weighing on the US dollar. However European shares, oil and metals all rose on Friday night, suggesting share market concerns are centred on the US. Asia Pacific investors are facing a softer opening, although GDP data from Japan may influence the session.

Gold is threatening to break through $1250 an ounce and longer bond yields are at three month lows in clear signs of risk aversion among investors. The creation of 155,000 US non-farm jobs in November missed forecasts close to 200,000, but solid wages growth (+3.1%) and ongoing lower unemployment (3.7%) offset the lower headline number.

Over the weekend authorities in Beijing called in the US ambassador to record a “strong protest”, and threatened further action if telco Huawei’s CFO is not released. The potential for further deepening of US/China trade tensions will likely see cautious trading today.

Rallies in copper, aluminium, iron ore and oil could help underpin any equity market sell downs. The more defensive positioning of regional indices and lower local currencies are further reasons to expect less damage today. The final read on Japanese Q3 GDP is expected to record a further deterioration to -2.0% pa, adding to growth concerns. Australian home lending is also expected to contract.