Overnight, US markets rebounded from their prior session's heavy plunge following the latest data on the American economy.

US factory orders contracted at a smaller-than-expected pace in December, easing fears of a manufacturing slowdown, which were sparked by yesterday's disastrous ISM PMI result.

Healthy earnings results from clothing retailer, Michael Kors, and KFC parent company, Yum Brands, provided a further boost to sentiment.

The Dow rose 72 points (+0.5%) to 15445, the S&P500 put on 13 points (+0.8%) to 1755 and the Nasdaq added 35 points (+0.9%) to 4032.

There were mostly gains in commodity markets, with gold retreating and other metals like copper rising modestly.

Oil climbed 1% to US$97.35 a barrel as traders looked ahead to tonight's supply report, which is expected to reveal a smaller increase in US stockpiles compared to the previous week.

The big story in currency markets was the Aussie dollar, which flew two percent versus the greenback after yesterday's RBA interest rate decision, which reduced the likelihood of another rate cut.

There is no major economic data due for release today.

Morning Market Update: Modest Bounce is a post from: Australian Stock Report Market Pulse Blog