In a night of two halves European markets slumbered until US Federal Reserve chair Jerome Powell delivered a boost to confidence with a dovish speech to the Economic Club of New York. The US dollar fell and shares soared as the Fed chair reversed comments from October and suggested US rates were closer to neutral levels. Industrial commodities rallied, with the exception of oil. Bonds sat pat as interest rate traders were already betting against the Fed’s previously more hawkish stance.

Asia Pacific investors are set for a day in the sun. However the cloud of trade tensions may quickly reappear at the kick off of the G-20 meeting tomorrow. No news could be bad news for markets ahead of the already mandated lift in US tariff rates on January 1. This may explain the muted response of Asia Pacific futures markets to the US exuberance. Ironically it was the growth sensitive IT, consumer discretionary and industrial sectors that led the markets higher.

Oil inventory data sounded a warning, showing a surprise build in inventory despite flat production, raising concerns about industrial demand. US wholesale inventory data also showed an unexpected build.

Investors have much to consider over the next twelve hours. Japanese retail sales, Australian capex, French GDP, and German and US inflation data could all change the course of trading. The Fed’s preferred measure of inflation, the PCE, is forecast to show an annual rate of 2.1% tonight. Any deviance will speak directly to the sentiment that drove the overnight action.

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.