Post-election surge starting to recede from markets
Share markets appear to be questioning the recent surge in prices following the recent US Presidential elections and were weaker overnight. In addition, a referendum in Italy will consider constitutional reforms put forward by Prime Minister Renzi.
If the reforms are denied with a 'no' vote there are concerns that this would undermine the nation's fragile political and financial stability.
The referendum is due on 4th December. In Europe, the FTSE was down 0.6%, the Dax fell 1.1% and the Euro Stoxx 50 was down 1.0%. In US markets, the Dow fell 0.3% while the S&P500 was down 0.6%.
Given the degree of uncertainty over future US policy and new concerns in Europe, investors were drawn to the relative safely of bonds.
US bond prices rose and 10 year US government bond yields fell 4 basis points to 2.32%.
Two year government yields were less affected by the concerns and were up just 1 basis point to 1.10%. Long bond yields also fell in Germany, Japan and the UK overnight.
Adding to the case for a December Fed funds rate hike was good news on the US manufacturing sector (see below).
In other news, European Central Bank (ECB) President Draghi reiterated that the ECB aims to preserve its accommodative settings in order to get inflation back to around 2%.
This comes as investors globally are questioning the effectiveness of extremely loose monetary policy.
The US dollar index begins the day much where it began yesterday morning. However, the AUD edged higher against the USD while opening relatively steady against the NZD.
Gold and cooper were flat but West Texas light crude oil rose 5.1% as Iraq's oil minister said that Iraq was prepared to cooperate with OPEC to reach an agreement this week that is acceptable to all members.
Also spiking upwards was the price of iron ore which rose from US$70.34 per tonne early last week to US$80.83 per tonne overnight, an increase of 14.9%.
There was no major economic data released domestically yesterday.
A round of fresh data in Australia begins tomorrow with building approvals followed soon after by private capital expenditure or business investment numbers, house prices and retail spending.
The November Dallas Fed Manufacturing index provided another dose of good news on the US economy.
Rising to 10.2 in November, it was the first positive reading since late 2014.
The index hit a low of negative 34.6 in January but has been climbing towards positive territory all year. Of note was a strong rise in the intention to hire element of the survey.