​​Risk appetite supported by optimism around trade talks​

​​​Trade talks resume with cautious optimism

​Asian equities traded mostly higher overnight, with risk sentiment supported by renewed optimism surrounding US-China trade talks. Negotiations between the world's two largest economies are set to resume in London today.

​Comments from US officials have helped buoy investor expectations ahead of the crucial discussions. Treasury Secretary Scott Bessent described the initial round of discussions as a "good meeting" whilst Commerce Secretary Howard Lutnick called them "fruitful".

​While no concrete outcomes have been announced from the previous sessions, markets appear encouraged by the constructive tone and the willingness to continue dialogue. This diplomatic progress represents a significant shift from the heightened tensions that characterised US-China relations in recent months.

​The positive sentiment reflects traders' hopes that meaningful progress could emerge from these high-level discussions. Any breakthrough in trade relations could have far-reaching implications for global economic growth and market stability across multiple asset classes.

​European markets poised for modest gains

​In Europe, equity futures point to a slightly firmer open following Monday's muted performance. The Euro Stoxx 50 future is up 0.2%, suggesting a modest rebound after the cash index closed down 0.2% yesterday.

​The pan-European STOXX 600 is holding steady around the 553 level, with investors remaining cautious but hopeful ahead of the next phase of US-China negotiations. This level represents a key technical support area that traders are watching closely.

​Gains in the autos sector have provided some support to European indices, reflecting the sector's sensitivity to global trade developments. However, weakness in financials and industrials has capped upside momentum so far this morning.

​The mixed sectoral performance highlights the ongoing uncertainty among investors about the broader economic outlook. While trade optimism provides a positive catalyst, concerns about economic growth and corporate earnings continue to weigh on sentiment in certain sectors.

​Currency markets show dollar strength

​In currency markets, the US dollar is trading firmer against most peers, with EUR/USD steady around the 1.14 mark. This strength reflects continued confidence in the US economy and expectations for monetary policy divergence.

​The Japanese yen remains on the back foot, placing it among the weakest performers in the G10 group. The yen's weakness continues to reflect Japan's ultra-accommodative monetary policy stance compared to other major central banks.

​Meanwhile, European government bonds are attempting a mild rebound after yesterday's declines, but the recovery in German Bunds remains relatively limited for now. This tepid bond performance suggests investors are adopting a wait-and-see approach to European fixed income markets.

​Commodities benefit from improved risk appetite

​Commodities are being buoyed by the improved risk tone across global markets. Crude oil prices are marginally higher, with sentiment lifted by hopes that trade progress might support broader global demand.

​There has been little in the way of new supply developments overnight, keeping the focus squarely on macro drivers rather than fundamental supply-demand dynamics. This suggests oil prices are primarily responding to broader risk sentiment rather than specific industry factors.

​Gold is also reflecting the mixed sentiment, with the precious metal facing headwinds from dollar strength but finding some support from ongoing geopolitical uncertainties.

​Individual stock movements worth watching

​On the corporate front, UK housebuilder Bellway saw its shares climb 4% after upgrading its full-year volume guidance, supported by steady reservation rates and a growing forward order book.

​This positive performance in the housing sector reflects improving confidence in the UK property market. Bellway's upgraded guidance suggests the company is seeing sustained demand despite broader economic uncertainties.

​Shares in fund manager Aberdeen advanced 5% after JPMorgan upgraded the stock to "overweight" from "neutral". This analyst upgrade reflects improving sentiment towards the asset management sector and Aberdeen's specific strategic positioning.

​Elsewhere, Novo Nordisk gained nearly 2% following reports that activist investor Parvus Asset Management is building a stake in the company. Activist involvement often signals potential corporate changes that could unlock shareholder value.

​UK employment picture worsens

​This morning’s UK employment data presents worrying news for the Bank of England (BoE) and the government. The unemployment rate rose to a four-year high of 4.6%, while the number of staff fell by 55,000 in April, and projections indicate losses of 100,000 in May. Wage growth slowed too, which at least allows the BoE some more leeway in considering cuts to interest rates to help stimulate the economy. 

​Much depends now on next week’s UK inflation data, to be released on 18 June, which might provide a further boost to the argument in favour of cutting rates (known as ‘dovish policy’).