Overnight market action was muted as investors contemplated the effects of a more dovish Federal Reserve and imminent trade talks between China and the US. Important data releases across the northern hemisphere painted a mixed picture, alternating between modest surprise and slight disappointment. Oil featured once again against the backdrop of a weaker US dollar.

After stronger retail sales from Japan yesterday French consumer spending was also slightly above forecast. However German and US inflation came in below expectations. The data deluge continues today. China PMIs are likely to dominate the Asia Pacific trading session ahead of German retail sales and Italian inflation numbers tonight. After a second night of strength in industrial metals an oil rally today’s estimated 50.2 read on the China manufacturing PMI is crucial. A slip below 50 into contraction territory would present real danger to recent strength.

Strength in local currencies is offsetting positive share market leads in share futures markets. Hong Kong and Japan are looking at modest opening gains, but the Australia 200 is slightly negative despite stronger commodity prices. The short term direction of markets is highly dependent on the G-20 gathering over the weekend, and in particular a discussion between Presidents Xi and Trump will be closely watched.