The combination of strong gains by the ASX 200 yesterday followed by relatively modest gains in US markets makes a steady opening look the logical assumption for our market this morning.

However, traders will be alert to the possibility of history repeating itself with yesterday’s bullish momentum carrying over today and upsetting the logic of following the conventional US lead. The fact that the index closed at its high after a 1.2% rally yesterday hints at the possibility of unsatisfied buying. Against this, traders will be weighing a soft overnight session for commodities, especially oil and a positive session for precious metals, neither of which suggest strong “risk on sentiment” for this morning’s session.

The US manufacturing PMI is and encouraging sign for both the US and global manufacturing sectors. The stronger than expected read in December, follows a jump in November and suggests that manufacturers are faring well despite a stronger $US with strengthening exports contributing to the highest read in the new orders index since May 2014.