IG Markets - Morning thoughts

IG Markets - Morning thoughts

Risk currencies rallied on Friday after the US dollar was put on the back foot by a weak payrolls report. Non-farm payrolls rose by 96,000 in August, falling considerably below the consensus call for a modest 130,000 rise. This increased hopes of a new QE announcement in the FOMC meeting later this week on September 13. As a result, EUR/USD continued its rally on Friday, breaking the 1.28 level, while AUD/USD printed a high a touch above 1.04. Market participants will be digesting some economic data which was released in China yesterday. CPI ticked up to 2.0% year-on-year (in-line with expectations), whilst industrial production came in a bit weaker than expected (8.9% versus 9.1%), the lowest reading since May 2009.

Ahead of the open, we are calling the Aussie market up 0.3% at 4339. We have seen risk currencies remain quite buoyant this morning, trading near Friday’s highs. With markets starting to price in a greater possibility of QE3 and the developments from China over the weekend, a strong session is on the cards. China President Hu Jintao was on the wires over the weekend at APEC summit, where he said that a slowdown in exports has been putting downward pressure on growth, however he pledged to boost domestic demand and promote more balanced growth. There is more data out of China today with trade balance figures due. On the local economic front, we have home loans data due out at 11.30am.

On a stock level, we expect a firmer start for BHP Billiton, with its ADR pointing to a 2% rise to $32.63. BHP has also sold its 37% stake in Richards Bay Minerals to Rio Tinto. Some of the resource majors have not participated in the rally we have seen over the past week and therefore should they manage to post some big gains today, we could be in for a strong start to the week. With QE talk ramping up, gold was the destination of choice and the precious metal surged to highs around $1742. As a result, expect another firm day for the gold miners. We continue to hear some positive comments from Qantas following its alliance with Emirates. The airline sees its international unit breaking even by 2015. There are a number of stocks which will be trading ex-dividend today and this might weigh on the index early on.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0375 0.0049 0.47%
ASX (cash) 4339 14 0.31%
US DOW (cash) 13291 -8 -0.06%
US S&P (cash) 1440.6 3.8 0.26%
UK FTSE (cash) 5797 7 0.13%
German DAX (cash) 7227 37 0.51%
Japan 225 (cash) 8861 -11 -0.13%
Rio Tinto Plc (London) 30.20 1.74 6.10%
BHP Billiton Plc (London) 19.06 0.63 3.40%
BHP Billiton Ltd. ADR (US) (AUD) 32.63 0.65 2.02%
US Light Crude Oil (October) 96.29 1.08 1.13%
Gold (spot) 1735.5 42.2 2.49%
Aluminium (London) 2023 37 1.85%
Copper (London) 7970 207 2.66%
Nickel (London) 16500 339 2.09%
Zinc (London) 1970 -81 -3.93%

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.

Please contact IG Markets if you require market commentary or the latest dealing price.

www.igmarkets.com.au

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