Risk is back in favour judging by overnight market action. The US S&P 500 Index hit another all-time high. European bourses rallied, copper and oil added to recent gains and the USD gained ground against other major currencies. Defensive investments such as gold and bonds slumped further. The positive moves point to gains across the Asia Pacific region today.

Strength in US durable goods orders in August underpinned a key market thematic. In a statement that confirmed the RBNZ’s maintenance of current interest rates it said this morning “global economic growth has continued to improve in recent quarters”. Recent data around the globe confirms this view and investors are responding to the empirical evidence. Despite concerns about a seasonal downturn for shares at the moment it appears the only way is up.

This is a crucial for investors in Australia. While the Hang Seng, the Shanghai Composite and the Nikkei 225 sit close to multi year highs the Australia 200 index is sitting on the bottom of its recent trading range. A bounce off yesterday’s close could quickly restore confidence. Conversely any souring of sentiment that saw local shares finish down a half percent or more today would provide a technical signal that may result in a sharp tumble over the coming days and weeks.