Global markets are responding to the unfolding trade dispute in a surprisingly robust manner. The overnight market action showed conflicting and contradictory trading patterns across asset classes that may be resolved in a surge in volatility. Asia Pacific markets are set for gains while the air of unreality lingers.

European bond market curves flattened overnight in a typical lower growth, lower inflation move. US bonds were unchanged after CPI data showed a lift in inflation. However shares surged in Europe and the US and industrial metals rallied as investors favoured higher growth exposures. The tech heavy Nasdaq outperformed. The differing reactions are not sustainable and markets could be vulnerable to sharp changes in direction.

China trade data today may act as a catalyst if it reminds investors of the potential negative impact of the recently announced trade barriers. The rally over the last twenty four hours was led by strong gains in Shanghai and Hong Kong, and these markets may once again determine the short term direction for global markets.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.