Market tensions ease

Positive news on the geopolitical front sent the European stock indices higher before market open. Talks between German Chancellor Angela Merkel and President Erdogan, as well as a potential meeting between their finance ministers, show a path to resolution to the Turkey crisis, which weighed on sentiment in Europe over the past week. It also showed Turkey that it still has allies in the West: Germany is Turkey's largest trade partner with bilateral trade flows of $42 billion. The conflict between the U.S. and Turkey, however, intensified after Qatar extended Turkey a $15 billion lifeline promise. European indices traded higher before market open.

On the other side of the Atlantic, the U.S. received a confirmation from China on resuming trade talks.

Thanks to both of these positive news, which had unnerved the markets in the past few months, stock index futures traded higher pre-open. S&P500 jumped 0,4% during the Asian session, while the USD/CNY declined 0,5%.

WTI prices also increased slightly, probably due to a potential resolution of trade conflicts. The AUD climbed almost 0,4% against the USD. The Australian dollar is considered one of the riskiest currencies, because the Australian economy, which relies a lot on commodity exports, is heavily exposed to the global economic cycle.

Asian indices, however, still traded lower, unable to recover some of their losses despite the slight return of risk appetite among investors. The contrast between continual declines in Asia and gains in Europe shows that investors are ready to seek some risk (by buying European equities) but are still wary of touching EM stocks.

Copper climbed 1,4% in London, after slumping 4% yesterday. Copper is considered a barometer of economic activity because it is used in construction and electronics. The gain today reflects that the market, especially given today's positive news, viewed the decline in copper to be excessive.

The dollar index fell 0,1%, likely due to less demand for safe havens.

Today Maerks, Henkel, Aegon and Carlsberg report results.

Also today, the UK and the EU resume talks on Brexit.

At 11:30 Sofia time, the UK releases its retail sales figures.

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