European shares slid and US markets squeaked out the meekest of gains in overnight trading. Futures markets indicate the Hang Seng index will drop at today’s open. However none of this matters to Australian investors as the 200 index has diverged and is driven higher by country specific factors.

Despite the general negativity ASX futures are up 12 points, and a test of the post-GFC high 60 points above yesterday’s close is a possibility. Elevated trading volumes this week point to institutional support for higher levels.

The drivers are likely trade related. A US trade delegation in Beijing brings tariff protection back on to the market agenda. While a trade war will hurt all nations, the gap between Chinese and US expectations is wide. The potential for escalation hangs over global growth prospects and therefore markets.

However Australia is a well-established trading partner with both nations and has a trade deficit with the US, making tariff sanctions unlikely. Australia’s status as a minor player in world affairs works for it, and may mean it is one of the few winners in all out trade war. This factor could deliver a sixth straight day of extraordinary gains for Australian investors.