US and China reassure markets that trade-talks still progressing

Market sentiment swinging from headline-to-headline

Market sentiment is swinging from trade-war headline to trade-war headline. It's catalysed increased volatility in financial markets, as some doubt grows about the prospect of a phase one trade deal. The trade-related news released overnight was, notionally, of the positive variety. That's seen the sell-off in equities ease, setting up the ASX 200 for something of a recovery today, after two days of heavy falls. Focus will largely remain on trade-war updates as they flow through the wires to end the week. However, Europe's economy will be under the spotlight, with a speech from ECB President Christine Lagarde, along with European PMI data, to be closely watched.

Upside momentum in stocks hobbled by trade-risk

Risk assets were scuttled in Asian trade yesterday, and safe havens spiked, as fears bubbled about the possibility that a trade-deal between the US and China may not come before the end of 2019 - if at all. The view arose after diplomatic tensions between the US and China clearly became re-inflamed, after US Congress passed the Hong Kong Human Rights And Democracy Act, prompting China to pledge "retaliation" to the decision. The animus provided the material for a sequence of trade-war related headlines yesterday, most of which that pointed major conflict in US and China trade-talks.

US and China jump in to settle market’s anxiety

A potential spiral out of control in financial markets seemingly sprung the Chinese and American PR teams into action. Because come the beginning of US trade, a handful of well-timed news reports hit the airwaves talking-up the current state of US-China relations, and had the effect of quelling market volatility. The first story came from the Chinese side, with reports that China has invited US trade negotiators to their country to further trade-talks. This was met hours later with the second market moving story last night, that suggested the US was prepared to delay the planned December 15 tariff hikes, should negotiations progress well.

Fear subsides throughout North American session

Though the VIX remains relatively elevated, the exchange of niceties between the US and China has extinguished some of the bearishness that crept into markets. US stocks are only a smidgen lower, with the S&P 500 dropping only 0.1% last night. The Aussie Dollar is down slightly still, but that's mostly due to a lift in the USD, as US Treasury yields recover some margin of their recent losses. Oil prices have managed to track higher once again, and gold is down slightly. And SPI Futures are pointing to a roughly 35-point rally from the ASX200 at the open this morning.

ASX200 to open higher, after eating a few punches

What looks like a solid pop higher for the ASX today comes off the back a couple of day’s of heavy losses across the market. Australian equities have had to battle the combination of both negative macro and micro news. Just yesterday, that lead the ASX200 0.74% lower, in what was a day of very high activity, and poor market breadth. From a price perspective, too, the ASX200 broke with an uptrend it had been building upon since the beginning of October. Although the trend remains firmly pointed to the upside, it appears the ASX200 faces a slightly greater battle in reclaiming its record highs.

European PMI data to test global growth narrative

In the day ahead now, in global macro news, a level of interest will be directed towards Europe’s economy – and what that says about European, and at that, global growth moving forward. PMI data is released for the continent, and will be used to test the prevailing narrative that business activity in the global economy is turning around – and that the apparent slowdown in global economic activity is reversing. Economist forecasts are suggesting this ought to be so, of course. Confirmation of this view will likely prove supportive of risk assets, while a weaker set of figures will force something of a review of the global growth outlook.

ECB President Lagarde to outline her policy vision

A more Euro-centric view of the European economy will also come from new ECB President Christine Lagarde tonight. A controversial pick, as a non-economist, to head the central bank, market participants will be perusing the details of President Lagarde’s speech for signs of a bit of a vision of how monetary policy will be handled under her watch. Although dissenters amongst the economics community exist regarding maintaining its current approach, market participants will be hoping for queues that the ECB’s loose monetary policy ought to continue into the future. Afterall, when it comes to investing, who doesn’t want access to perpetually cheap-money?