All is not well with the economic world, at least according to bond and commodity traders. Despite rallies across European and US stock markets there is an ongoing shift away from growth assets.

Crude oil slumped more than 3% in overnight trading. Copper fell in London and Chicago. Ten-year bonds hit new eighteen-month highs, and gold rallied, defying a stronger US dollar. These moves signal deteriorating sentiment about the outlook for global growth, and expectations that interest rates will stay lower for longer. A share market rally against this backdrop is remarkable, and some may see it as a corrective move in an unfolding downtrend for stocks globally.

The ongoing trade dispute between the US and China is the key short-term issue for markets. The recent US escalation of tariffs and targeted sanctions points to more conflict than expected a month ago. US GDP data and personal consumption numbers released last night showed only a modest slowing, but weaker prices and building inventories suggest a domestic impact. Widespread reports that US citizens don’t believe Beijing will pay for the tariffs may add pressure for another presidential about face.

China PMIs due mid-session may determine the outcome of today’s Asia Pacific trading session after this morning’s Japanese inflation data disappointed. Forecasts that the manufacturing PMI for May will decline to 49.9 speaks to the impact of the trade disruption. A reading away from the consensus could either confirm or dispel the current gloom.

Crown Resorts shares are in focus in Australia after the 46% shareholder announced a transaction to sell almost half of his holdings to entities associated with Macau’s Lawrence Ho. Previous discussions with Wynn Resorts meant pointed to a stock overhang, and the overnight announcement may relieve some shareholders.

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