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Risk-on mood emerged at the end of the session amid optimism over a Brexit deal and strong U.S. earnings, despite renewed concerns over global growth.
Last Friday’s optimism waned amid the uncertainty of a breakthrough in trade and Brexit negotiations. Separately, the U.S. cash bond market remained closed for the Columbus Day holiday.
Hopes of a trade deal rose in recent days underpinned the risk-on mood, although markets were very volatile during the week.
Market risk appetite improved on prospects of a limited trade deal, although volatility remains ahead of the trade talks conclusion.
China’s intention to conclude a partial deal improved the market risk sentiment as investors remain sensible to trade news, despite the recent escalation of trade tensions.
Market risk sentiment worsened as trade pessimism and geopolitical risks keep intensifying.
Caution prevails in financial markets ahead of the resumption of trade talks and FOMC meeting minutes.
Risk-off mood prevailed in financial markets this week, with key volatility indicators (VIX and the MOVE) hitting near two month highs amid a string of disappointing US activity data and worsening trade tensions between the US and Europe following WTO’s ruling.