We saw a decent appreciation in global stock indices and risk sentiment in general over the course of yesterday’s trading as fears of a global trade war receded in the now familiar see-saw of opinion on how far the US will push protectionist policies onto its trading partners. There will be more to this story over the next few trading sessions as we approach the G7 and markets will react accordingly, but in general, the stock indices are riding this particular wave of uncertainly fairly easily at the moment. The Dow finished the session up 1.4% with the S&P 500 up 0.86% and futures are showing a positive start to the day for the Asian indices.
Earlier in the day the Aussie dollar got a boost from stronger than expected GDP numbers and although most market players don’t expect this to affect the RBA – we’re looking for stronger wage and price numbers to change expectation – it is certainly a positive for the Australian economy. The Aussie battler has now climbed over 200 pips against the greenback since the end of May and should remained bid while positive risk sentiment remains in the market. The euro also continued it’s recent recovery as ECB chief economist Peter Praet confirmed yesterday’s rumors that there is a possibility of putting an end date on QE for the central bank at next week’s meeting.
Looking ahead to today’s trading and once again sentiment looks set to override fundamentals as we move into the end of the week. We have tier 1 data due out in Australia and bulls will be hoping for a trifecta of positive results with today’s Trade Balance print after yesterdays GDP and Monday’s Retail Sales expectation beats. There’s little in the way of other tier 1 data due through the other sessions but we do hear from BOC Governor Poloz in the North American time zone and with the G7 due to start tomorrow in Canada, market focus will be very much on that part of the world for the next couple of days.