Stock and energy markets rallied overnight after a China commerce ministry spokesperson said that escalation would not benefit China or the US. Gao Feng told reporters:

“China has ample means for retaliation, but thinks the question that should be discussed now is about removing the new tariffs to prevent escalation of the trade war.”

The comments were widely interpreted as an indication that China will not retaliate when new US tariffs on $300 billion in goods come into effect on 1 September. US President Trump said in a radio interview that talks “at a different level” would take place today.

The deemed improvement in trade negotiations spurred investors to action. Major European and US stock indices gained 1%-2%. Industrial commodities rallied, led by a 2% jump in crude oil. However safe haven assets only edged lower in an indication that there is no “all clear” on trade as yet.

The Australian corporate reporting season concludes today. Ship builder Austal pleased investors with a profit result around 10% ahead of forecasts. A 9% short sold position in Harvey Norman’s shares mean its report will receive particular attention. Heavily shorted stocks have featured this reporting season, regularly making large moves in both directions as their results confirmed or disproved short sellers’ views.