After a week of high drama and volatility, the share market will open on a soft note this morning. This reflects a note of caution on whether prices have moved far enough in advance of the “Trump themes” such as fiscal stimulus, re inflation and deregulation.

The impact of a potentially cautious mood this morning will be amplified by the fact that both Westpac and ANZ will trade ex-dividend, slicing 21 points off the ASX 200 index.

While the momentum of adjustment to Donald Trump’s election is showing signs of waning in the share market, this is yet to happen in either the bond or gold markets.  The major sell-off in bonds continued in the US on Friday and in the Australian market this morning. Rising long term interest rates will provide share markets with another reason for caution.  Higher rates and a stronger $US are putting pressure on the gold price which is likely to see further selling of local gold mining stocks today.

The question for resource stocks today will be whether weaker oil prices and signs of profit taking in copper will outweigh the benefits of another sharp jump in spot iron ore and a soft Aussie Dollar. The key to this may be how spot iron ore prices performing later in the day.

The latest data on China’s credit growth is consistent with recent trends indication an expansionary policy with total credit expansion well above GDP growth although the rate of increase is down from earlier in the year. This points to the likelihood that today’s data on the Chinese economy will continue the recent trend of steady growth in the domestic economy.