Stock markets on both side of the Atlantic held steady yesterday as investors took a breather before a busy week packed with key interest rate decisions, in particular from the US Federal Reserve.
Investors in Europe and the United States moved cautiously ahead of the G20 summit next week where US President Donald Trump and his Chinese counterpart Xi Jinping are due to hold hotly-awaited talks on their long-running trade war.
Hong Kong stocks rallied however yesterday, leading many Asian markets higher after last week's losses, with investors cheering a decision by the city to suspend plans to push through a controversial extradition law.
Wall Street meanwhile opened without much action, with Briefing.com analyst Patrick O'Hare saying that “there isn't a tonne of conviction in the early going, partly because the market appears to be caught up in a swirl of headlines carrying loose ends”.
One of those swirling headlines is the ongoing tension between the US and Iran - yesterday Tehran announced its uranium stockpile will soon pass the limit set under a nuclear deal abandoned last year.
The news exacerbated an already strained relationship after the US blamed Iran for two tanker attacks in the Gulf of Oman last week, claims that Tehran calls “baseless”.
Naeem Aslam at London-based trading firm ThinkMarkets said this week “the focus is going to remain on central banks and their monetary policies”.
The US central bank will unveil its monetary policy announcement tomorrow, followed by both the Bank of Japan and the Bank of England on Thursday.
Many observers are tipping a US rate reduction next month as the world's biggest economy shows signs of stuttering.
“Anything less than a clear signal that the Fed is open to cutting rates soon in response to building downside risks to the US economic outlook could leave financial markets disappointed,” noted MUFG currency analyst Lee Hardman.
In Hong Kong, investors returned to buying after three days of losses that saw the Hang Seng drop more than two per cent after protests against the law - which would have allowed extradition to China - turned violent on Wednesday.
Another, peaceful, demonstration Sunday saw around two million people take to the streets, according to organisers.
The plan had also spooked business leaders who feared it would damage the city's reputation as an international business hub.
Traders "will breathe a loud sigh of relief today, as on Wednesday when tear gas and rubber bullets were filling the air, the markets were getting extremely jittery that this ticking time bomb was about to explode", said Stephen Innes, managing partner at Vanguard Markets.
“Fortunately, cooler heads prevailed.”