Safe haven assets are in high demand. Optimism about a G-20 meeting trade deal between China and the US is receding, and the head of the Federal Reserve warned of increasing economic risks. US ten-year bonds traded below 2%, the lowest yield in more than two years. Gold hit a six-year high and is threatening to break the important US $1,430 level.
The US dollar is the exception to the theme. Forex traders fret that the US is seeking a lower dollar to drive its economy as the White House wages trade war. The weaker dollar may explain gains for crude oil and base metals despite the shift away from growth.
Concerned investors pushed share indices lower. Average European losses were around a 0.33%, but US sellers sprang into action. The broad based S&P 500 shed almost 1%, and the tech heavy Nasdaq dropped 1.5%. Overnight trading in Asia Pacific futures markets indicates all major indices will fall at today’s open.
A lack of scheduled market events could see gloom prevail. However commodity strength may see Korean, New Zealand and Australian indices outperform, potentially aided by a more positive short-term outlook for their respective currencies.