Markets held in overnight trading after a re-pricing spurred by the China/US trade deal announcement. Bond yields rose again, and gold tested and failed at an important resistance level. Institutional equity investors were active around the globe.

Growth assets were mixed. Crude oil rose in anticipation of a weekly draw on supplies, but Comex copper fell. European shares slipped but US indices made modest gains. Stock volumes are above average, reflecting the early expiry of monthly and quarterly futures and options in this last full trading week of the year. Professional investors often use the heightened liquidity to re-shape portfolios, bringing a higher probability of significant single stock moves.

A shift of sentiment late in US trading may see deteriorating sentiment across the Asia Pacific region today. Many local currencies are higher against a weakening US dollar, leaving shares vulnerable to international profit taking.

The spread between Australia 200 December and March Share Price futures is trading “rich”. This suggests there is a greater demand to roll “long” SPI positions. In other words, professional investors may have hedged overweight cash positions with SPI futures, and now either need to roll these hedges forward or buy shares. This dynamic could provide significant support to shares into year-end.