A steady session in US markets together with a bounce in some major commodities should deliver a firm opening for stocks this morning.
While geopolitical risks have increased since last week’s terrorist attacks in Paris, investors are unlikely to react to Turkey’s shooting of the Russian jet. It’s difficult for investors to risk getting out of stock markets in a situation like this unless there is a clear threat of disruption to wider world commerce or financial markets.
Energy stocks are likely to benefit from the strong jump in oil prices last night, however another drop in iron ore prices is a pointer to the fact that the ongoing dynamic of supply pressure remains in place for much of the commodity sector.
Bank stocks which remain vulnerable to profit taking following steep gains over the past couple of weeks, are likely to be the key to whether the ASX 200 index can sustain good gains over the day’s trading.
The Aussie Dollar is beginning to break above last week’s resistance this morning. This follows signs of profit taking in long $US positions prior to next month’s ECB and Fed meetings. Today’s construction data and tomorrow’s capital expenditure data may be important for the Aussie Dollar. Market’s will be looking for signs that investment outside the mining and housing sectors is improving to consolidate the emerging view that the RBA has finished cutting interest rates.