US-CHINA TRADE WAR, YEN, AUD, NZD, USD – TALKING POINTS:
- Yen up, AUD[1] and NZD[2] down as US-China trade war fears return
- S&P 500[3] index futures hint global markets back in risk-off mode
- Can China outlast the US through tit-for-tat conflict escalation?
Currency markets were back in risk-off mode in Asia Pacific trade, with the defensively-minded Japanese Yen[4] outperforming while the sentiment-geared Australian and New Zealand Dollars fell. US-China trade war considerations took center stage again[5].
Regional markets were unable to capitalize on a positive lead from Wall Street, a move driven by hopeful developments[6] on US auto tariff prospects and the USMCA trade pact. That’s after President Trump issued an executive order seemingly intended to punish Chinese telecoms[7] like Huawei and ZTE Corp.
Markets appeared to read this as likely to complicate already frayed relationsbetween the world’s top-two economies, lowering the probability that the situation might get better before it gets worse. That has set an ominous for the remainder of the trading day.
US STOCK INDEX FUTURES WARN MARKET SENTIMENT IS SOURING ANEW
A relatively lackluster offering on the economic calendar seems likely to keep macro-level sentiment trends in the driver’s seat. Bellwether S&P 500 stock index futures are pointing convincingly lower, warning that APAC-session trading patterns have scope for follow-through.
Besides the Yen, the US Dollar[8] may be well-supported if another wave of divestment
