Important reads on inflation due in the next twenty-four hours in China and the US will shed light on any price impacts of the lingering trade dispute. Any upside surprise could curtail the ability of central banks to support economies, and may see assets sold off. Markets traded defensively overnight ahead of the releases.

Interest rate markets in the US now price a greater than 90% chance of an 0.25% interest rate reduction by August, with an almost 50% probability of a 0.50% cut. This may represent an extreme of dovishness. Bond markets backed off again overnight, and nickel and iron ore made substantial gains. These cross asset class moves may indicate a turning tide, with market sentiment swinging back towards growth.

Trade and growth are at the centre of market performance, and headline and tweet risks remain elevated. Traders have seized on the G-20 meeting in Japan later this month as a catalyst for potential agreement. While president Trump maintains he is the current impediment to a deal the increased unilateral demands coming from the White House indicate some movement behind closed doors.

Demand and supply conditions in commodities may aid any swing back to growth exposures. China iron ore stockpiles are at lows, and OPEC is reportedly close to agreement on an extension of production restrictions. Resource support could once again see the Australia 200 index outperform, adding to the technical momentum from yesterday’s break to fresh twelve-year highs.