IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Overnight, US markets extended their post-election slide on the back of continuing fears over the upcoming fiscal cliff negotiations and on concerns about the gloomy outlook for the European economy.

With America re-electing President Obama to the Whitehouse, the current status quo has been maintained, with the Republicans and Democrats retaining control of the House and the Senate respectively. This is leading to the obvious concern that the US’s delicately-balanced fiscal position is set to remain in a state of gridlock as the country fast approaches the dreaded ‘fiscal cliff’ – where Bush-era tax cuts are due to expire and automatic spending cuts are set to take effect early in the new year. These concerns precipitated a massive global ‘risk off’ session immediately following Obama’s election victory, with the same thematic playing out again last night. As had been expected in the lead up to the election, the market’s attention was always going to quickly turn to these crucial negotiations as soon as the election had passed and it is this issue, more than any other, which will determine the run home for global markets into the end of the year.

Also weighing on sentiment overnight was a continuing uncertainty surrounding Greece’s next round of bailout funding, with German Finance minister Wolfgang Schaeuble suggesting that next week’s intended November 12 decision day might still be too early to decide if Greece should be granted additional assistance. This issue was compounded by a successful Spanish bond auction which cast further uncertainty over whether or not Spain will soon request assistance from the ECB.

Courtesy of the heavy offshore losses of the last few days, the Australian market is set to end the week on a negative note with the ASX 200 called to unwind approximately 48 points or 1.1% lower at 4435. It is also worth noting that approximately 19 points of this fall can be attributed to both NAB and Westpac trading ex-dividend. Losses today are expected to be relatively broad based. Despite base metals seeing some marginal buying interest, miners are likely to lead our market lower as investors shun risk assets, with BHP’s ADR suggesting the local heavyweight will open down approximately 1.2% at $34.27. While the market is set to see selling on the open, traders and investors alike will be looking for something positive to hold on to. That may come in the form of some continually improving Chinese economic data, of which we have a swag of to be released over the course of the day, including, CPI/PPI, fixed assets investment, industrial production and retail sales.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0406 0.0003 0.02%
ASX (cash) 4436 -43 -0.96%
US DOW (cash) 12829 -127 -0.98%
US S&P (cash) 1378.8 -19.0 -1.36%
UK FTSE (cash) 5761 -61 -1.05%
German DAX (cash) 7194 -83 -1.14%
Japan 225 (cash) 8740 -82 -0.93%
Rio Tinto Plc (London) 30.85 -0.31 -0.99%
BHP Billiton Plc (London) 19.53 -0.03 -0.17%
BHP Billiton Ltd. ADR (US) (AUD) 34.27 -0.40 -1.17%
US Light Crude Oil (December) 85.03 0.04 0.05%
Gold (spot) 1733.0 15.9 0.93%
Aluminium (London) 1924 0 0.00%
Copper (London) 7647 31 0.41%
Nickel (London) 16161 155 0.97%
Zinc (London) 2218 37 1.69%
Iron Ore 121.4 -0.20 -0.16%

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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