Today will not be the day the ASX finally breaks through the ceiling around 5800.Concerns over the state of US politics and a weak lead from international markets will see the ASX 200 fall away from this level yet again.

Markets are clearly nervous about US political risk. While business and Republican party support might still mean that infrastructure and tax reforms are passed, the wider concern for markets is the possibility that the last 12 months will translate into another 3 years of government impotence.

US stock markets have been notable for their lack of volatility over the past 6 months. This has provided a relatively steady lead for global stock markets. Prior to the recent moves, the last major decline in the S&P 500 occurred on 17 May when it dropped 1.8%. However, this was a one day wonder and was immediately followed by a low volatility rally

This time may be different. Last Thursday’s Korean scare sell off has now been followed by another significant decline. This could be a more typical situation where volatility creates volatility as pent up profit taking and nervous investors are motivated to act as prices begin to weaken.

The gold market may be a useful indicator of whether any major risk off sentiment is developing in world markets. It is approaching well defined chart resistance between $1300 and $1330. If markets are really concerned, gold is likely to break up through this resistance

Local markets will not be helped today by base metal’s failure to build on the sharp gains of the previous day. This leaves the metals’ rally continuing to show signs of stalling at recent high levels and mining stocks may follow suit today.