The risk mood is keeping more defensive in European morning trade, but market sentiment isn't as dire as it was at the start of the session
US futures are seen down by ~0.3% and off earlier lows, with European indices also seeing over 1% losses still but are a little higher than their low points today.
Here are a couple of key market developments so far in the day:
- US-China tensions continue to play out as China orders closure of the US' consulate in Chengdu. The tit-for-tat play is still ongoing as consulates are the new tariffs.
- US Treasury yields moved to the lower bound of its range since April around 0.54% to 0.56% before recovering slightly now to 0.59%. That remains a key spot to watch for yen pairs and risk sentiment in general ahead of the weekend.
- European PMIs highlight a more constructive outlook on the recovery, but there are still risks to the labour market that could derail the current trajectory.
- Additional US stimulus hits a bit of a bump in the road, and that isn't helping the risk mood amid the retreat in US stocks yesterday and the rout in Chinese equities today. We'll have to see what the narrative brings ahead of the weekend.
Over to major currencies, the yen is keeping firmer with USD/JPY seen at 106.30 currently amid the softer risk mood and the move lower in Treasury yields. The dollar is trading a little more mixed across the board but overall moves are modest for now.
Elsewhere, gold and silver are holding their ground with the former looking for a nudge to get above $1,900 while silver is hoping to keep a potential push back above $23.
