A dawning realisation that a China/US trade deal is at least weeks away, and studies showing US companies and consumers are wearing substantial costs, saw enthusiasm for growth exposures evaporate overnight. Despite a benign European stock trading session base metals slumped and American shares traded lower as the US dollar strengthened. Asia Pacific markets are set for a rough opening today.
The Shanghai Composite rose more than 11% over the last 7 trading days and may be due a corrective move. However reports that China is considering a reduction in sales tax to bolster trade exposed sectors may limit trading losses. Sentiment indications are unclear given a further drop in the Japanese yen and gold prices overnight.
Information releases could also shape today’s regional performance. Privately calculated Australian service sector performance indices released this morning show further contraction in February, and come ahead of current account and export data later this morning. Mid-session brings services PMIs for China and Japan, and the Reserve Bank of Australia will announce a decision on interest rates this afternoon. Although no change is the almost universal expectation any further development in dovishness in the accompanying statement could hit the Australian dollar while potentially supporting shares.