Growth exposed shares and commodities rallied again overnight despite bond markets flashing red. The UK 100 index led the way as the British Prime Minister indicated a greater willingness to compromise on a Brexit agreement. Australian investors may enjoy outperformance today after the Federal government delivered an election year budget last night.

Buyers returned to push bond yields lower after a two day pause, indicating belief that central bank responses to lower economic prospects will drive interest rates even lower. This contrasts with recent stronger reads on global manufacturing and the consequent rally in shares, crude oil, copper and iron ore. This conflict between markets must be resolved. There is heightened potential for a violent adjustment, and Friday night’s non-farm payrolls data could trigger significant market moves.

Lowered earnings guidance from retailer Walgreens resulted in a late session fall in the Dow Jones industrial Average, although the tech-laden Nasdaq managed a positive close. Futures in Hong Kong and Japan are close to flat. However Australian futures are pointing to a half percent rally, reflecting the stimulatory nature of the budget announced overnight. Tax cuts and infrastructure spending combined with a budget surplus could see the Australia 200 index extend gains into a sixth session.