In finishing well off their lows last night, US markets have given lie to the nervousness evident in Asian markets yesterday morning. This relative calm should support a firm opening on the local market this morning.

Markets appear reluctant to take the Trump disappointment them too much further at this stage. With US economic growth showing signs of improvement and the Fed clearly embarked on a monetary tightening cycle, the significant correction that has already occurred in bonds and the US Dollar may already reflect an adequate wind back of the market’s Trump exuberance.

While the Aussie Dollar held steady against a weak US Dollar overnight, the ongoing weakness in iron ore put the currency under pressure against most other currencies. With the spot iron ore price now falling rapidly under the weight of large inventories and weaker steel prices, markets may remain nervous about the Aussie Dollar.

Investors may also remain nervous about mining stocks while the iron ore price is falling. However, much of the damage may already have been done with significant pre-emptive sell-offs in stocks like BHP; Rio Tinto and Fortescue that could see them closer to their lows than their highs at this stage.