Most US equities edged lower overnight after the Hong Kong and Shanghai stock markets shook off recent weakness with a steep rally yesterday. The surge in Chinese regional shares might be a combined effect of major bank reserve ratio reduction, and the State Government’s public determination to support the private economy. This unique formula is unlikely to be replicated by other countries and the local positive sentiment may be relatively contained.

In contrast the weaker risk appetite in the US could be stemmed from the continuously higher US bond yield. The US investors may need more than corporate earnings reports to outweigh a higher borrowing cost as well as an expectation of more rate increase. However, short-term optimism could be fuelled if the leading tech shares could deliver a stronger growth prospect.

A stronger US dollar undermined most major currencies strength overnight. The Japanese Yen weakened and the Australian dollar slid on lower commodity prices. On the other hand, the EU geopolitical factors continued to buffet regional currencies. The Euro fell ahead of the deadline for Italy to address its 2019 budget deficit. The British Pound dropped as Brexit talk mingled with a potential political drama. The currency markets may remain sensitive to the US dollar movement until the EU Consumer Confidence Index due on Wednesday morning.

Gold prices slumped on a stronger US dollar. Oil prices were relatively flat despite the looming tensions between the US and Saudi Arabia on diplomatic issues. Most key industrial metal advanced which might be reflecting a better industrial outlook, particularly after China showed a stronger will to combat a slower economy. Commodity prices may remain sensitive to market sentiment and risk appetite. For instance, a higher risk appetite could support oil prices as oil markets may be considered as a risk asset in portfolio management.