International markets behaved last night as if they had largely factored recent good news into valuations already.

The US stock market failed to close above last week’s high despite Saturday’s news that the Senate passed its tax reform bill. The focus in US markets remained on sector rotation, with investors abandoning high value tech stocks in search of cheaper sectors. Profit takers also chipped away at oil, which has failed to rally after OPEC’s decision to continue its production cuts for the whole of next year.

This underwhelming international lead has set up a weak start on the Australian market. A key question for local traders will be whether banks remain under pressure as investors lighten exposure due to the Royal Commission risk. At this stage, the old adage of the trend is your friend looks the safest assumption with banks not yet at a level that looks obviously attractive for bargain hunters

News that Amazon will open tomorrow could be a negative for the retail sector today. The immediate question about Amazon had been one of timing. Electronics and clothing retailers now face the prospect of a new competitor for this year’s Christmas sales with Amazon confirming a same day delivery option for customers in Sydney and Melbourne.

Retail investors and currency traders will also have a watching brief on release of retail sales data this morning. Worse than expected data would be depressing, given the weak trend of recent months and looming competition from Amazon. Better than expected data would be a relief but positive market reaction might be limited unless it is particularly strong. Mildly positive retail sales data today would simply represent some mean reversion after the poor results of recent months.