IG Markets - morning thoughts and opening prices

In US trade, markets retreated in a session of corrective consolidation after Friday’s big move. A meeting of Greek political leaders to discuss reforms demanded by the troika in order for Greece to receive the second bailout package worth at least €130 billion was once again postponed to Tuesday. European leaders are now warning that time is running out for Greece, and have urged Greek politicians to accept the conditions. As a result, market has traded relatively ‘risk off’.

Among the major averages, the Dow Jones Industrial Average was down 0.1% to close at 12845. The S&P was down a point at 1344, and the NASDAQ lost 0.1% to close at 2902.

Greece continues to be the elephant in the room in an environment where you get the sense that markets want to rally. The country has redefined the word imminent, and we wouldn’t be surprised if the negotiations stall further. The commodity market showed more of a reaction to the stall in finalising Greek deals, with copper falling over 1.0% and oil losing close to 1%. As a result, the local resource plays will be in for a tough start. BHP’s ADR is pointing to a 0.2% fall at the open. Cochlear reports today and analysts will be looking to see the impact that the high Aussie dollar had on its earnings. Bradken is also reporting, with the company likely to benefit from an increase in mining spend.

The interest rate decision at 2.30pm will be today’s highlight, with most analysts expecting the RBA to cut rates by a further 25 basis points to 4%. This is a high impact event for the Aussie dollar and interest rate sensitive stocks. The accompanying statement is likely to get even more attention, as investors seek an indication of the RBA’s stance going forward. Should the RBA cut rates, the Aussie dollar might endure some minor selling before refocusing on global macro issues. Ahead of the open, we are calling the Aussie market up 0.1% at 4302. Given the weakness we saw in US trade, this is likely because the local market is anticipating a rate cut. The local market is likely to trade relatively flat in tight ranges before picking a direction after the rates decision.

IG Markets provides round-the-clock CFD trading on currencies, indices and commodities. The levels quoted in this email are the latest tradeable price for each market. The net change for each market is referenced from the corresponding tradeable level at yesterday’s close of the ASX. These levels are specifically tailored for the Australian trader and take into account the 24hr nature of global markets.

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ENDS

BUDGET 2012:
Parliament Debate Live - Video Of Budget 2011
Keith Ng Interactive Graphic: How the Budget Breaks Down
BUDGET 2012 - FULL COVERAGE: Reports / Analysis - Press Kit - Reaction (from everybody) - Previews (from everybody) - Pre-Budget Announcements

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