Potential Slow Burn

Asia Pacific investors are anticipating relief today after overnight share bounces and gains for oil and industrial metals. Safe haven assets such as gold and the Euro are lower as funds move back into equity exposures. So after US data did no harm to sentiment. A major source of market disruption is sidelined as markets in China are now closed for the week, and short sellers could add to the positive momentum in a scramble for cover.

US factory orders, labour costs and non-farm productivity were all softer than expected, prompting further backing away from a September rate rise. The numbers appeared to keep buyers on the sideline, expecting increased selling. However, the selling didn’t arrive and buyers were forced into the market in the last hour of trading. US futures are up further in post-market trading, suggesting early indications of Asia Pacific opening gains may underestimate today’s investor appetite.

Australia retail sales are released late in the morning session. July is expected to show a further increase of 0.4%, adding to June’s 0.7% gain. The trade balance is forecast to deteriorate further from June’s negative $2.9 billion. These cautious expectations point to further upside risk in the session.  Japan will release services PMI’s ahead of the UK, Germany France and Italy tonight. The numbers will create a backdrop to an ECB rates decision. While no change in rates is expected, traders are looking for an increase in the monthly purchases of bands following lighter activity over summer.