Little if any light was shone on the trade war situation last night but buyers pulled the trigger anyway. More than anything, this revealed the extent of latent buying power in stock markets and this delivered a strong open for the ASX 200 this morning.

While bargain hunters are nervous about missing out should “everything turn out to be ok”, the current rally is likely to be capped until investors get more evidence on a couple of fronts. First, there remains potential for more news on world tariffs. Second, markets may breathe a little easier, if Fridays US wage growth data does not exceed expectations.

China’s economic plan suggests it will be a firm pillar of co-ordinated global growth in 2018. The planned modest reduction in stimulus will not upset the outlook for solid growth in the short term.  

The Aussie Dollar has drifted sideways against $US over the past couple of days but markets have a watching brief on this morning’s retail sales and net export data. Investors in retail stocks will also have a keen interest in today’s retail sales data and will be looking for it to bounce back over the January sales period.

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