US markets fell into line with the rest of the globe overnight. Tweeted threats from the US president over the weekend roiled energy, industrial metals and Asia Pacific share markets this week. Previous complacency in US trading turned to panic and major North American indices shed 1.5-2.0% as investors finally woke to the danger posed by a breakdown in trade negotiations between China and the US.

Bonds rallied as traders contemplated a lower growth future. The US dollar held against the Euro, but the Japanese yen strengthened as investors sought safety. Spot gold prices rose and are threatening to break the current downtrend. On the flipside commodity currencies dropped with oil, iron ore and copper prices.

China’s vice-premier Lui arrives in Washington tonight, offering the opportunity for a circuit-breaking announcement. However the widening gap between the parties, seemingly centred on enforcement and intellectual property rights, suggest any comment will come later rather than sooner.

This could mean further selling of growth-exposed assets over the coming sessions as the uncertainty and potential deterioration are priced in. Futures markets are pointing to opening losses for regional stock indices.

The Reserve Bank of New Zealand delivers an interest rate decision today. The RBNZ shifted to a negative bias two months ago, and many commentators believe the stage is set for a cut. Militating against the consensus of a 0.25% is the recent weakness of the New Zealand dollar. NZD/USD is sitting on key support at 0.66, and a world leading cut today would risk a plunge in the NZ dollar.

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