International markets took a breather overnight, backing off from a five session rally amid disappointing earnings out of the US.

Caterpillar provided a rude awakening for investors, slashing its full year revenue and earnings forecasts amid slumping orders from mining companies.

The mining equipment giant magnified concerns that the recent market rally has stretched equity valuations to unreasonable levels.

There were modest declines on each of the three major US indices. The Dow lost 55 points (-0.4%) to 15413, the S&P500 shed nine points (-0.5%) to 1746 and the Nasdaq let go of 23 points (-0.6%) to 3907.

Most commodities suffered heavy losses, with oil diving 1.5% to US$96.86 a barrel after data showed US crude stockpiles rising more than expected for the fifth consecutive week.

Copper was another major decliner on concerns of tighter monetary policy in China, the world's biggest consumer of the red metal. Copper futures tumbled 2.1% to US$3.27 a pound.

With markets in risk off mode, the greenback and yen rebounded against other currencies. The Aussie was among the hardest hit, as traders reacted negatively to a spike in Chinese lending rates yesterday.

Although there is no local economic data due for release today, a key regional focus will be on the HSBC China Flash Manufacturing PMI, due for release at 12:45pm, AEDT.

Morning Market Update: Overnight Consolidation is a post from: Australian Stock Report Market Pulse Blog