Despite an ongoing sell off in bond markets international equities turned soggy in overnight trading. Striking German metal workers weighed on European exchanges and stronger data and good company reports failed to lift US indices. Futures markets indicate weak openings but a commodities rally and recent outperformance may give Asia Pacific investors more to cheer about over the day.

Members of Germany’s largest union enacted their first strike in 34 years. The action appeared to rattle investors who jumped on gains that previously took the DAX to record highs. This investor caution flowed across the continent and the Atlantic. As the US reporting season approaches the half way mark sales growth is up 10% and profits are ahead around 15%. Macro data continued the good news with a stronger than expected ISM reading. The weakness in US indices is surprising in light of the news flow.

Asia Pacific investors may shrug off these soft leads. Japanese and Australian equities outshone the world yesterday, and a clear valuation gap in favour of the region could see further surprising gains today. Rallies in oil and industrial metals could see a focus on resource sectors.

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