A UK parliamentary vote to seek an extension of the Brexit deadline saw European shares rally overnight, although currency markets were largely unmoved and industrial commodities dropped. Reports during US trading that a scheduled trade deal signing ceremony was delayed until late April sank US stocks, illustrating the higher sensitivity to developments in the China / US trade negotiations.
The almost certainty that China’s National People’s Congress will today endorse new foreign investment law is important. It may be viewed as a significant step towards resolution of the trade dispute, and see optimism return to markets during Asia Pacific trading.
The swing from European risk on to US risk off initially pressured haven assets such as bonds and gold, before a rally back to square. The recent global run of “just right” data that offers promise of future growth without driving interest rates higher immediately is broadly supporting all assets. The dark side of this phenomenon is that any indications of either economic weakness or strength could tip the balance.