Fundamental and political wrap: risk on, for now, as geo-political angst calms post Xi/Trump

From a fundamental and political perspective for Tuesday, the markets have cheered Xi's comments where Trump tweeted that he was “very thankful for President Xi of China’s kind words on tariffs and automobile barriers” and his “enlightenment on intellectual property and technology transfers. “We will make great progress together!” he said.

The Chinese President was stating that China should “push for free trade” and that “China will not threaten others ...", and, "... will not undermine existing global order,” and adding that China should, “sharply widen access to market”.

Stock markets, which have plunged repeatedly in recent weeks over fears of a potential US-China trade war, replied to the event positively.  Hong Kong's Hang Seng Index and Dow futures were up more than 1% after the speech while for the business on Wall Street today, the US benchmarks rallied higher with the Dow up 1.79% at the time of writing, along with the S&P 500 +1.67% and the NASDAQ +2.07%. 

On the FX space, there has been a pullback in the yen and dollar with a return of the reflation trade on carry plays with yields only slightly up despite the turn around in global stocks and commodities. 

From here, it will be now down to any traction that can be made on progress towards these trade negotiations.  US Trade Advisor Navarro has already stated that,' doors are open for China ... U.S. is ‘moving in a measured way’ regarding Chinese tariffs.

Further key headlines from the session as follows: (Sources: RTRS, NYT,  LiveSquawk).

• US trade advisor Navarro: US is ‘being taken apart’ by ‘unfair trade practices’.
• Trump says he welcomes Xi's 'enlightenment on intellectual property and technology transfers'.
• White House says encouraged by Chinese president xi's words on trade but wants to see concrete actions.
• White House will not confirm whether lawyer Michael Cohen still represents Trump.
• Facebook’s Zuckerberg: we are investigating 10s of thousands of apps now.
• U.S. Federal reserve proposes reworking bank capital requirements.
• Atlanta Fed 1Q18 GDP forecast 10/04: 2.0% (prev 2.3%).
• ECB spokesman says Nowotny’s views are his own, they do not represent the view of the governing council.
• Russia tells u.N. Security Council colleagues does not agree with U.S. Draft resolution to create new Syria chemical weapons inquiry - diplomats.
• US requests un sec. 
• Council vote at 20:00 BST on draft resolution to set up inquiry into chemical weapons attacks in Syria - RTRS
• Fed's Kaplan: base case is still 3 Fed hikes this year.
• W.House trade adviser Navarro: 'doors open' for trade talks.
• Trump's top homeland security advisor Tom Bossert to resign.
• Trump 'certainly believes' has power to fire special counsel Mueller.
• NYT: FBI raid related to more payments to women.
• EU's Barnier: UK pm may has brought more clarity to negotiations.
• ECB's Nowotny: could lift deposit rate to -0.2pct to start the process of hikes.
• ECB: Nowotny's views are his own, don't represent view of gov council.
• EU's Katainen: discussions regarding EU, us trade tensions ongoing.
• Saudi Arabia said to signal ambition for USD80 oil price.
• Uae energy min: oil market rebalancing will be completed this year.
• Facebook shares rally as CEO Zuckerberg testifies.
• EU’s tusk: his task on Brexit is damage control/Irish question at the center of Brexit.