European share rallies and record levels for the US S&P 500 index may translate to support for Asia Pacific shares today. However a sliding US dollar and the looming introduction of US trade tariffs may weigh on investor action. A lift in industrial commodity markets and a minor sell off in bond markets point to a pro-risk stance overall.
A softening US dollar is a key driver of current market action. A strengthening dollar is generally supportive of regional shares. However a weakening dollar lifts commodity prices. This makes predicting market moves in commodity sensitive countries such as New Zealand and Australia more challenging. Futures are pointing to positive starts in Hong Kong and Tokyo, but currency factors may undermine the session.
Additional danger lurks in the introduction of tariffs by the US tomorrow night. The previously announced imposts may remind investors of the threat to economic health and also highlight the risks politicians in both the US and china are willing to run.
Australian investors may ignore all international influences in favour of political turmoil and a busy reporting day for corporates. The potential for a change of Prime Minister is rattling investors, and policy paralysis in energy is thumping retailers like AGL and Origin. Around 25 top companies will report earnings on the busiest day of the season so far.