European and US markets traded cautiously on Friday night despite positive trade comments from both Washington and Beijing. The S&P 500 index closed 6 points higher, although it was down 10 points over the week. However crude oil fell and bonds rallied in signs that sentiment around the trade negotiations is deteriorating.

Not all markets agree. A modest strengthening of the US dollar and a weaker gold price suggest some optimism that a phase-one trade agreement will occur this year. The release of guidelines to protect intellectual property in China over the weekend is a step forward for the negotiations.

Peaceful district council elections in Hong Kong on Sunday are also positive for regional markets, although a record voter turnout and the election of pro-democracy candidates could see further pressure on the Hong Kong government.

The passage of a bill through the US Congress that requires the review of Hong Kong’s special trading status annually is more concerning. Beijing has expressed repeated displeasure at what it sees as an attempt to meddle in China’s internal affairs. The bill requires President Trump’s signature to pass into law. Such a move could derail the current trade optimism and spark risk-off trading in global markets.

Australia 200 index futures closed 12 points higher on Saturday morning, but the gain could be erased by several developments since. Westpac bank’s shares may come under pressure for a fourth day as it grapples with the fall-out from serious allegations by regulator Austrac A $275 million raising by the Bank of Queensland this morning could add to pressure on the financial sector.