A soft overnight lead from US markets has seen a nervous start by the Australia 200 this morning.

Rotation between industry sectors and national markets is a dominant theme for equity markets in a broadly neutral macro setting at the moment. Last night, selling of high value US tech stocks was a notable feature of markets while locally, bank stocks are one of the few sectors to have attracted any support.

There is a degree of irony, in Aussie banks outperforming US tech stocks this morning given yesterday’s news that Apple has moved to protect its turf by disallowing the use of Westpac’s Keyboard to facilitate smartphone payments. The risk of technology disruption is a significant issue for banks. The ability, or otherwise, to use third party applications may be important to banks’ ability to withstand external competition for payments services

This morning’s price action makes for a nervous time for those with a short term bullish outlook on the Australia 200. The index is again trending down, making lower lows and highs. At this stage, a temporary wobble would not be inconsistent with a more bullish outlook.  However, to maintain a positive outlook the index would need to form a base at or above the 78.6% Fibonacci retracement and previous lows around 5658/5678

Last night’s news of weaker than expected durable goods orders in the US adds to an impression that the US economy’s pull out of a weak 1st quarter will be moderate. This is supporting the case for a weaker $US.

 Against that background, Friday’s data on US personal consumption could be a key number for the outlook on 2nd quarter growth and $US. This week’s US oil data and  the question of whether the oil price can form a base around current levels will also be important for thinking on the inflation outlook and $US.