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IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Risk assets were well bid in the European session as the positive momentum from Asian trade continued to support. Optimism that the S&P downgrade will push Spain closer to requesting a downgrade was the main sentiment driver. EUR/USD enjoyed a strong bounce off the lows from the Asian session and was back above 1.29, printing a high of 1.295. AUD/USD continued its run from the release of the local jobs numbers and topped out a touch above 1.029. Yesterday, we said that selling into strength is likely to be the preferred strategy by traders, particularly if we approach the 1.03 level. In US trade, risk assets got an initial boost from a better-than-expected unemployment claims reading. They dropped to 339,000 (versus a consensus of 368,000) and this was the lowest level in four years. However, the euphoria surrounding the data waned as risk assets pared gains and remained sidelined into the close of the US session.

Ahead of the open, we are calling the Aussie market up 0.2% at 4492. Based on yesterday’s close, the ASX 200 is down 0.2% for the week. Should we open where our call is suggesting, the market is essentially flat for the week. As a result, market participants will continue to monitor the wires for the catalyst that will drive us out of this holding pattern. In the last few sessions, the market has had to come off the lows to finish relatively flat after some negative leads from US trade. As a result it is difficult to gauge how investors will react to the early gains as it seems they are content buying equities on pullbacks. Unlike yesterday, there is no local economic data to look out for today. Elsewhere in the region, there is quite a lot on the calendar in Japan including a tertiary industry activity report and a speech by BoJ Governor Shirakawa. There is also some data due out of China over the weekend including trade balance, new loans and M2 money supply.

On a stock level, we expect a firmer start for BHP Billiton with its ADR suggesting it will be up 0.5% at $33.43. However, iron ore prices lost some ground, dropping to $115.80. Discovery Metals has rejected an $830 million takeover bid from a Cathay Fortune-led group citing it as inadequate. Iluka will be closely watched today as brokers react to its disappointing quarterly report from yesterday’s session. Borrowers will be watching ANZ Bank today as it is due to announce its interest rate following the RBA’s 25 basis point rate cut last week.

Market Price at 7:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0264 -0.0009 -0.08%
ASX (cash) 4492 9 0.19%
US DOW (cash) 13351 24 0.18%
US S&P (cash) 1434.7 5.4 0.38%
UK FTSE (cash) 5825 60 1.05%
German DAX (cash) 7269 80 1.11%
Japan 225 (cash) 8581 31 0.36%
Rio Tinto Plc (London) 30.72 0.71 2.37%
BHP Billiton Plc (London) 19.51 0.31 1.59%
BHP Billiton Ltd. ADR (US) (AUD) 33.43 0.18 0.54%
US Light Crude Oil (November) 92.47 1.00 1.09%
Gold (spot) 1767.3 3.2 0.18%
Aluminium (London) 2017 8 0.41%
Copper (London) 8221 49 0.59%
Nickel (London) 17725 -7 -0.04%
Zinc (London) 2184 -16 -0.71%

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.


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