By Greg Peel

It's a brief Overnight Report this morning, reflecting the fact the Independence Day holiday in the US shut down Wall Street and gave many traders across the globe the chance to have a bit of a rest as well. In thin trade, stock indices in London and Germany fell 0.3% and France fell 0.5%.

Economic data were a factor, with the UK PMI services index falling more than expected to 54.4 – a slowing attributed to recent strict budget cuts – while retail sales in the eurozone rose only 0.2% in May when a 0.4% rise was expected.

Perhaps taking its cue from Europe, the SPI Overnight fell 13 points or 0.3%, suggesting the possibility of a tenth negative session in a row in Australia today. Clearly the replacement of the RSPT with the MRRT has not been sufficient to spur a rebound in the Australian market, overridden, as the policy change is, by more macro concerns over the slowing global economy.

One thing I will say at this point, however, is that we seem to now be in a mood of defeatism – one in which it seems nothing could ever happen to inspire a positive close on the market. The last time the market was in this sort of mood was late February/early March 2009.

Weak European data sent the euro and pound lower against the US dollar last night, affecting a small rise in the dollar index to 84.56. The Aussie fell slightly to US$0.8393 while gold slipped US$2.40 to US$1208.90/oz.

There was little interest on the LME and base metal movements hardly troubled the scorer, with the exception of zinc, up 1.5%.

Today in Australia sees the May trade balance which will likely still reflect strong bulk commodity prices in the month. June and July numbers will provide a better indication of whether prices have been impacted by the more recent souring of the global outlook.

The RBA will also make a rate decision today. While the cash rate will be left on hold, it will be interesting to read Glenn Stevens' thoughts on the global economic weakness which has developed further since the June meeting.

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