European markets held firm overnight in the face of weaker than forecast manufacturing PMIs. A rally in Spanish, Italian and UK bonds suggests investors responded to the potential for lower rates for longer. The US Labour day holiday restrained trading. Currency markets steadied, but oil and lead gains reflected some appetite for growth.
Regional events and data could drive Asia Pacific trading today, although a single tweet on trade matters could change the market landscape.
The final components of Australian GDP are released today. If net exports echo yesterday’s stronger than expected inventory data the Australian dollar is vulnerable to further gains. The Reserve Bank of Australia is widely expected to stand on interest rates at this afternoon’s meeting.
US futures moved into positive territory in out of hours trading, lifting Nikkei and Hang Seng futures. Individual stock selection in light of recent corporate reporting may see a bottom up, rather than top down determined close for share markets. Ongoing worries about the Turkish lira and Argentinian peso could mean further pressure on emerging markets and a currency flavour to today’s trading.