After a brief spike, volatility in US stock markets has settled again, providing a steady as it goes lead for the ASX 200 index.

US stocks have unwound the discount for last week’s concerns over the stability of US Government. This puts US markets back in the mode of maintaining steadily high valuations in expectation of solid earnings growth; relatively low bond yields and a benign risk environment.

The chink in the armour for US stock indices is that they are yet to clear recent highs, leaving them vulnerable to a negative chart outlook should selling resume in the near future

The US Dollar also showed signs of risk on moves last night, rallying off lows. Markets will be looking for tomorrow’s release of the FOMC Minutes to confirm expectations that the Fed will lift rates in June.

Aussie Dollar traders will have a watching brief on today’s release of data on first quarter construction work done. This has been a weak spot for the Australian economy in recent years, reflecting the wind back in mining infrastructure development. There has not been a positive read on construction work growth since September 2013. Markets are anticipating another moderately negative figure in March, with Cyclone Debbie and heavy rain having a negative impact.

Energy stocks will be in focus today, with the oil market having rallied strongly in advance of the Vienna meeting on production cuts. Focus will be on confirmation of an agreement to limit production for 9 rather than 6 months.

However, oil prices could also be influenced by the US weekly production and inventory data tonight, with markets likely needing establishment of a significant trend reduction in inventory over the US summer to maintain current prices. While oil market focus will be on the Vienna meeting, the US proposal to reduce its strategic reserve is potentially a medium term negative for the supply balance and a threat to the already diminished ability of the Opec/Russia cartel to control markets.