Lowered growth forecasts for the EU and looming diplomatic tensions between the US and China made headlines overnight. Mario Draghi admitted the EU economy had an unexpected slowdown, and ECB will formally end its quantitative easing (QE) program while continuing to reinvest.

On the other hand, news of a second Canadian being detained in China broke out, exerting pressure on the existing US-China trade negotiations. Nonetheless, movement in safe-haven assets suggests investor confidence is resilient. Gold prices slid, the Japanese Yen weakened, and most bonds were stable.

This may explain why financial markets largely reacted with lower volatility. Both European and US equities were relatively flat. The Euro edged lower and the Pound rallied. The US dollar was little changed despite disappointing US Unemployment claims data. Oil prices bounced and base metals declined. The mixed leads from overnight market action could lead to cautious thinking for Asia Pacific investors today. Futures markets are pointing to opening pressure for the Japanese, Hong Kong, and Australian stock markets.

Investor risk appetites may lift as soon as global economic data is unveiled today. Investor buying in Japan may increase if the Business Sentiment Surveys and the PMI due this morning fortify confidence and growth. Hong Kong and Shanghai stock markets may see higher volatility if China Industrial Production and Retail Sales data defy perceptions of an economic slowdown. The EU, Italy, and German PMIs may gear the direction of the Euro and regional shares in the next 24 hours.  

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