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Nervous start to the week

Nervous start to the week

Falls in international markets on Friday night and lockdown jitters this morning are adding up to a nervous day’s trading in the Asia Pacific region. The ongoing talks about a Brexit trade deal and the inability to reach agreement is also weighing on sentiment. Traders shunned the British pound, the Euro and commodity currencies this morning in favour of the safer haven US dollar.

The concerns will likely extend into stocks when trading begins this morning. Futures indicate opening losses in all major markets. There are no significant data releases, and the looming holiday period could lead to light and fluke trading.

The market response to rising infection rates is curious in light of the lack of reaction so far. In particular, US indices have hit record levels alongside infections and fatalities. Yet the re-institution of strict lockdown measures in the UK seemed to dampen vaccine optimism on Friday night. Expert warnings that a vaccine doesn’t mean virus eradication may be a factor.

A shortened trading week remains packed with data. UK and US GDP, as well as Japanese activity and inflation data later in the week could have an impact. Despite the pressure oil stocks, crude oil and base metals are higher, and the growth positive moves may put a floor under any selling today.

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