Asian stock markets tumbled this morning following a lacklustre session on Wall Street overnight that saw the Dow Jones fall more than 100 points.

The incredible rally in Chinese equities yesterday clearly failed to jumpstart risk sentiment as geopolitical tensions weighed heavily on investor confidence. Global equity bulls seem to be entangled in a gruelling battle with ongoing US-China trade disputes, global growth concerns, geopolitical tensions and prospects of higher US interest rates. With the various geopolitical risk factors bubbling violently in the cauldron, all the ingredients for a market-shaking selloff across global stocks seem to be in place. All goods things must come to an end and this could be the story for the bullish global equity markets.

Dollar gains on safe-haven demand

The Dollar remains a popular destination for safe-haven flows amid the mounting geopolitical tensions across the world.

Uncertainty over Brexit negotiations, the standoff over Italy’s budget and US-Saudi tensions have sent investors rushing to the Dollar. With the Greenback also supported by optimism over the US economy and prospects of higher US interest rates, the fundamental outlook points to further upside. In regards to the technical picture, the Dollar Index is bullish on the daily charts with prices trading near a two-week high above 96.10. A solid weekly close above 96.00 has the potential to trigger a move towards 96.20 and 96.48.

Commodity spotlight – Gold

Gold bulls hit the ground running this morning as geopolitical concerns promoted risk aversion and accelerated the flight to safety.

The yellow metal has scope to shine with intensity this week as the risk-off mood sends investors rushing to any form of safety. However, with the Dollar also benefiting from safe-haven flows there could be fierce competition between the two. Gold seems to be winning the battle of the safe-havens this morning with prices trading around $1,231 as of writing. A solid breakout and daily close above the $1,233.50 resistance level is likely to inject Gold bulls with enough inspiration to challenge $1,245.

Currency spotlight – GBPUSD

Brexit-related uncertainty remains the primary culprit behind Sterling’s weakness.

The clock is ticking with under six months left until the official Brexit deadline and the Irish border issue remains an unsolved puzzle. Investor attraction towards the Pound is likely to diminish as investors evaluate the possibility of a no-deal Brexit scenario. The GBPUSD is under pressure on the daily charts with a breakdown below 1.3000 opening a path towards 1.2930.