European stocks slumped last night as relations between Italy and the EU hit a debt friction point. US stocks hit three-month lows ahead of GDP and inflation data due tonight. Fears that the numbers will confirm a slowing US economy rattled investors and drove bond prices up. Major forex pairs are steady, but commodity currencies are under pressure.

China will release PMI indices tomorrow. The outlook for global growth, and any drag from the festering trade dispute, remain key issues for markets. The data over the next twenty-four hours has potential to either confirm or dispel the gloom. Industrial commodities continue to give mixed signals, with crude oil and iron ore on firmer ground but copper extending the slide since mid-April to 11%.

The impending evidence may see a calmer Asia Pacific trading session today. Futures markets are pointing to small losses at the opening. However given the pressure on regional bourses over the last few sessions a bounce is possible.

The Australian share market may respond to local positives rather than global negatives. As China targets rare earth exports to the US, locally listed Lynas Corporation may extend its four day, 25% rally. Some investors may form the view that Australian companies are well-placed to fill any trade gaps opened in the China/US relationship.

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