Despite gains for US and European shares Asia Pacific markets may come under pressure today. A further slide in crude oil prices speaks to declining sentiment. After the US market close President Trump decried a lack of progress in talks with Mexico, and put a Monday deadline on the introduction of tariffs. US overnight futures are trading in the red, and the combination of these factors may see any positive stock sentiment evaporate.

Currency markets are steady, but the Mexican peso slid 1% on Trump’s tweet diplomacy.

”Progress is being made, but not nearly enough!.........Tariffs at the 5% level will begin on Monday, with monthly increases as per schedule.”

The central concern for the global economic outlook is the weaponisation of tariffs to pursue political goals. In tying the threatened barriers to unauthorised immigration the US president has taken the spreading trade disputes beyond economics, significantly increasing the difficulty of negotiating solutions. The move adds to perceptions that the White House is creating domestic political theatre without regard to the international costs.

The succour of central banks looks like cold comfort as the growth outlook deteriorates. Crude oil dropped to five-month lows on a 6.7 million build in the inventories. In contrast European PMIs released overnight fell broadly in line, and illustrated ongoing services expansion. The outperformance saw the Euro hold recent gains.