Momentum continues to fade in a wide range of markets including stocks, bonds currencies and base metals. The central question for traders now is whether this is just a pause in the trends that developed after the US election or is a more significant correction about to begin?

 The answer to this question is likely to hinge on the results of this weekend’s referendum in Italy and the OPEC meeting tonight.  Markets are going into both these events pricing a degree of pessimism. Oil, the Euro and Italian banks shares have all declined in recent weeks.

The oil market is unlikely to be impressed by any token, face saving agreement from OPEC largely based on production freezes. The substantial increase in OPEC production over recent months will leave the market in a surplus position for some time unless it can agree on significant and sustainable production cuts.

The rally in mining stocks has lost momentum this week, suggesting potential profit takers have been getting trigger happy.  This means that lower copper and spot iron ore prices overnight may be a catalyst for a correction in the materials sector today.