Oil and the NZ dollar will likely dominate trader discussions this morning. Nervous investors sold down European and US markets overnight, and bonds rallied while gold steadied. Sliding industrial sentiment in crude oil was offset by gains for copper and iron ore, but the session on balance suggested a risk off bias.

US oil production increased again this week, albeit at a slower pace. Inventories remain elevated. The lack of a supply side response to lower prices from US shale producers kicked support from under oil markets. The slide places increasing pressure on OPEC’s ability to maintain producer discipline and brings greater potential for oil markets to spiral downward. Although falling industrial costs are ultimately good news for industry the impact on sentiment could outweigh the positives.

The RBNZ stuck to its current stance, maintaining interest rate targets at current levels. Analysts parsed the statement as an indication of static NZ interest rates, some until 2019. Although this decision was widely forecast the NZD leapt in response. This possibly reflects the lifting of lower inflation expectations to meet the RBNZ view.

These mixed leads mean opening indications in the Asia Pacific region vary. Shares in China and Hong Kong are tipped by futures traders to open down, whereas Nikkei futures are flat and Australia shares could open higher after the global downward drift failed to match the dramatic falls of yesterday.