Investors overnight edged away from pricing the worst case global trade war scenario. A lack of White House tweets and optimistic comments from Treasury Secretary Mnuchin over the weekend saw US shares roar back to life. The sentiment shift came too late for European stocks. Although industrial commodities rallied, further gains for gold sounded a warning note.

As seemingly always the USD fell in response. Tellingly the Japanese yen fell further as safe havens including bonds came under pressure. Just as gold ran against the trend away from safe havens, copper dropped despite gains for most other base metal and oil prices. The lack of consistency across asset classes points to investor disagreement about the outlook and is an indication of potentially higher volatility to come.

The response of Asia Pacific futures markets reflects caution. Opening gains for stocks of 0.5% to 1% look tepid against the 2%-3% lift in US indices. A lack of significant data during the session may see currency markets dominate. Strengthening local currencies are rarely a positive for regional markets but are unlikely to overwhelm today’s risk on buying.