IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Risk appetite remained resilient through European and US trade, with modest gains across the boards. However, there was a loss of momentum in risk assets as the enthusiasm quickly faded following the BoJ's announcement of an additional ¥10 trillion of asset purchases. The more interesting move was in USD/JPY which was well bid before and after the BoJ meeting. The pair rallied through 79 to a high of 79.222, but fell sharply on a retest of 79. USD/JPY is now trading all the way back down at around 78.38. Housing data in the US continued to show positive signs of recovery with existing home sales growing by 7.8% month-on-month to 4.82 million in August, beating consensus of a 2.0% rise to 4.47 million. There was not much data out of Europe, but a Greek finance ministry official noted that Greece and the Troika reached an agreement on as much as €9.5 billion out of the €11.5 billion of budget cuts that Greece pledged to deliver. As a result, it seems there is progress on that front. The positive US data saw gains in the risk crosses, capped with AUD/USD only managing a high of around 1.05 and EUR/USD failing to get back to 1.038.

Ahead of the open, we are calling the Aussie market down 0.2% at 4410. However, this is hardly concerning considering we finally broke into a new trading range yesterday. As a result, market participants are likely to be looking to buy the dips and we could see this shore up the market early. It is a busy day on the economic front with plenty of PMI numbers due out. The China HSBC flash manufacturing PMI numbers are going to be closely watched due to the ongoing China growth concerns. New Zealand's Q2 GDP showed 0.6% growth while the market was forecasting 0.4% quarter-on-quarter growth. This put downward pressure on AUD/NZD which dropped to 1.263.

On a stock level, we expect a softer start for BHP Billiton, with its ADR suggesting the stock will be down 0.8% at the open to $33.96. The sharp drop in oil prices following a rise in inventories could weigh on the energy sector. In fact, it was a tough night for commodities in general apart from iron ore which jumped to $109.50. As a result, Fortescue Metals could be in for another positive day. The US housing data could see James Hardie and Boral well bid today. Macmahon Holdings will be an interesting one to watch after that big drop we saw yesterday following a profit downgrade. Investors still shouldn’t look past gold stocks following all the policy action we are seeing from central banks.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0480 0.0012 0.11%
ASX (cash) 4410 -8 -0.17%
US DOW (cash) 13568 -57 -0.42%
US S&P (cash) 1457.4 -5.1 -0.35%
UK FTSE (cash) 5889 -3 -0.05%
German DAX (cash) 7376 -22 -0.29%
Japan 225 (cash) 9190 -42 -0.46%
Rio Tinto Plc (London) 31.63 -0.31 -0.97%
BHP Billiton Plc (London) 20.01 0.04 0.20%
BHP Billiton Ltd. ADR (US) (AUD) 33.96 -0.26 -0.76%
US Light Crude Oil (October) 92.04 -4.22 -4.38%
Gold (spot) 1770.1 -6.5 -0.37%
Aluminium (London) 2138 -33 -1.50%
Copper (London) 8350 -16 -0.19%
Nickel (London) 17763 -227 -1.26%
Zinc (London) 2264 -17 -0.72%

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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