Originally published by CMC Markets
An ongoing, trade-based rout in China shares spilled into European trading overnight. Continental shares fell and oil and metals markets slumped. A White House indication of active trade discussions with Europe stopped the rot during US trading, and major indices recouped losses and posted gains for the session. The US dollar pulled back from highs but still recorded a lift after stronger activity data.
Stronger than anticipated PMIs in the UK and US were complemented by ISM reads that showed an acceleration in manufacturing growth in the US. The positive surprises were somewhat obscured by trade fears, largely due to elevated share market valuations.
Both precious and industrial metals fell, aided by a stronger dollar. The negative sentiment in China trading appeared to infect commodity markets. Oil dropped after the US President called on Saudi Arabia to turn on the taps. Commodity currencies were hard hit. The New Zealand dollar hit two year lows against the US dollar, and the Canadian and Australian dollars echoed the move.
The U-turn in sentiment pushed Asia Pacific futures markets into the green. However light volumes, a packed economic calendar and key central bank statements to come may see a light and sour trading day.