A hawkish Bank of England and a conciliatory US President drove market action overnight. The US dollar softened, shares rose and base metal prices surged as markets stepped back from recent pessimism, aided by recent hints of further China stimulus. Currency markets took centre stage. The British pound leapt more than 2%, and the New Zealand and Australian dollars largely followed, although for different reasons. Overnight futures trading is pointing to a stronger start for Asia Pacific stocks.

BoE Governor Mark Carney homed in on Brexit risks in a press conference following the widely expected decision to keep UK rates on hold. His leaning towards a Brexit deal pulled traders back from forecasts of a “no-deal” break with the EU, lifting sentiment. Accompanying comments that the UK economy is already at full capacity and inflation is above target saw market expectations of a rate hike move forward to June next year.

Carney’s robust assessment set base metal prices alight. Nickel, zinc, copper and lead all jumped after recent pressure. US President Trump tweeted news of a “long and very good” discussion with China’s President Xi. Apparently improving global trade relations added to the positive momentum, and Comex copper trading extended the already impressive LME gains.

The outbreak of optimism could see a positive finish to the week for regional investors. Australian retail sales numbers are the only macro release today. Explosives manufacturer Orica reported a net loss for the full year after charges for impairments and restructuring. Although management delivered a positive outlook, the 16% fall in underlying earnings could see ORI shares under pressure today. In contrast, Macquarie Group once again beat forecasts for its half-year profit.

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