China and the USA signed a phase-one trade deal overnight. The details reveal this is more of a cease-fire agreement than a resolution, and attention turns immediately to the next phase of the negotiations. Market reactions suggest there is little consensus on the impact of the agreement, as both risk assets and safe havens finished the session higher. Softer European inflation data and US corporate reporting were pushed into the background.

Although the scope is debatable there is no doubt the deal is a pro-growth development. Traders may argue the benefit is priced in, and although US shares finished in the green, the close was lower than the new record highs struck before the signing ceremony. Curiously, gold and bonds rallied. A general asset rally is normally the result of developments that indicate lower interest rates for longer, meaning the overnight market moves are contradictory. This conflict mean it’s likely one of these market impulses is wrong, and that either risk assets or safe havens are vulnerable in the coming days.

Opening reactions in the Asia Pacific region suggest a restrained response. The softer US dollar is supporting the Yen, and commodity currencies like the Australian, New Zealand and Canadian dollars are holding overnight gains. The Australia 200 index breached 7,000 this morning for the first time, after yesterday’s close just shy of the mark. Futures indicate a small opening lift in Hong Kong and a tiny drop in Tokyo.

US earnings season has barely begun, with just 5% of reports in. Early indications suggest positive surprises in healthcare and consumer sectors, and pressure on industrial and technology earnings. Tonight Morgan Stanley, Charles Schwabb and Bank of New York Mellon report.