A sliding USD pushed gold and bond markets higher and cooled investor enthusiasm in overnight trading. Despite the dollar weakness, copper and oil fell as supply concerns hit markets. This will test the underlying strength displayed by the Australia 200 index this week.

In US trading utilities and real estate were the hottest sectors. This is in direct contrast to trading locally yesterday, where these two sectors weighed on the market as they traded ex-dividend. The overnight appetite could see investors piling back in today. Weakness in industrial, metals and a second day of selling in oil markets means energy and materials stocks may at least partially give up recent gains.

Single digit annual gains for most Asia Pacific markets means year end effects are likely positive. Although Japanese shares were hit by a stronger Yen, most regional markets bounced off lows in intraday trading this week. This evident support could see the Australian share market hit a new 2016 high in trading today.

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