US investors drifted away from risk assets overnight after the Chinese stock markets saw more losses. US stocks plummeted and oil prices fell. Gold prices and the Japanese Yen edged higher as the risk-off tone kicked in and investors marched in to safe havens.

The sell-off in stock markets might not be triggered by any specific reasons but the concern about a slower global growth could be behind the scene. The international trade disputes, the unsettled Brexit talk, and a lower global growth forecast from the IMF, are all factors that may influence the investor behaviour from time to time and possibly initiate a correction. Nonetheless, it is possible for the market to bounce if the US corporate earnings reports could fuel short term optimism. A slightly lower US bond yields and borrowing cost could lift market sentiment as well.

The US dollar rallied overnight on a lower unemployment claim number. Most major currencies were weakened. Notably, the Euro slid during the EU summit and the British Pound softened on a lower than expected UK Retail Sales data. Currency markets may remain sensitive to geopolitical factors and the influence of a stronger US dollar. For instance, any headlines related to the discussion of Brexit, the Italy budget issues, and other challenges within the EU could lead to a higher volatility in the regional currencies.

Futures markets are pointing to a rough day for Asia Pacific investors. In particular the recent weakness in Shanghai and Hong Kong stock markets may continue if investor confidence is undermined by the risk-aversion attitude spread from the US. However, the China economic activity due this afternoon could soften investor selling if a more assuring economic outlook is shown. This data includes China GDP, Industrial Production, and Retail sales growth.