Trade worries were the main focus on Monday, with stocks falling hard, at one stage down around 2.5%, before a late squeeze higher, with the DJI and the S+P finishing the day down by around 1.3%. The relationship between the US/China was the centre of attention following a report that Trump was considering targeted measures to prevent China from acquiring US technology. A tweet from Mnuchin denied the story, so for the time being the market remains uncertain, as well as very nervous as to what the eventual outcome to all the trade concerns will be.
In the currency markets, the US$ was mixed to lower, with safe-haven demand for the Jpy being evident although US$Jpy has managed a 40 point rally off its session lows. The commodity currencies were weak due to the trade worries, while the Euro was strong – in part due to good IFO numbers in Europe.
Tuesday is rather thin on the ground for economic data and it looks as though politics will drive any potential market moves. Asia is completely empty, with Europe not much better, with only the UK CBI Industrial Trends Survey – Realised to provide any inspiration. The US will look to the Richmond Fed Mfg Index and the Case Shiller House Price Index for guidance along with speeches from the Fed’s Bostic and Kaplan. Have a good day
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