The global recovery in risk appetites continued overnight as expectations of positive news from Beijing rose on reports of an extension of trade talks into Wednesday. Further gains for shares and industrial commodities offset falls in bonds and gold, and currency markets largely marked time. Asia Pacific markets are set for a positive start, but a speech by US President Trump may have an influence on today’s session.

While analysts argue about the longer term economic outlook the negotiations between China and the US are the most likely short term driver of market action. Reports of the presence of Vice Premier Liu spurred optimism. While a comprehensive agreement is unlikely to emerge in the coming days the clear commitment to the talks from both nations has soothed recent savage bearishness. The ongoing reversal in oil and copper prices points to a more positive view of the global economy.

Investors enjoying the turnaround in shares are hoping that President Trump will stick to domestic matters in his first televised address to the nation. Many expect it will address US centric concerns on immigration and the current impasse with Democrats about the building of a wall on the Mexican border. However the President’s far ranging style may see more market sensitive topics raised. Traders are on alert for any signals on trade after a positive Presidential tweet this morning. The speech is slated for 1 pm AEST, in the middle of the Asia Pacific session.

Futures are pointing to opening gains in Hong Kong, Japan and Australia. Wages data in Japan and building approvals in Australia (f/c -0.3% Nov, -24.8% pa) will speak to growth concerns as well as individual stocks, and may blindside traders focussed on Beijing and Washington.

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