IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Risk assets enjoyed a strong bounce in European trade on the back of Greece’s successful bond auction. Greece was looking to raise around €3 billion from a one and three month bill auction and managed to raise €4 billion. This will help to pay down some debt maturing on Friday. As a result, equities and other risk assets were well bid into the close of the European session. However, sentiment turned sour in US trade, with equities turning negative after having been positive early in the session. A wider-than-expected federal budget deficit and Fed member Janet Yellen’s comments were the main catalysts of the drop in US trade. Looking at the risk currencies, EUR/USD bounced back to a high of 1.273 after having been sharply sold off in Asian trade, and remains steady a touch above 1.27. AUD/USD finally broke through 1.044 and went on to print a high of 1.0446, but has since pulled back into 1.043.

Ahead of the open, we are calling the Aussie market up 0.1% at 4385. This is a significant pullback from the 4408 high the futures traded during US trade. Following the sharp drop in local equities into the close of yesterday’s session, the ASX 200 has breached some key support levels. As soon as the market broke support at 4448 (which was previous resistance), the losses accelerated. Following yesterday’s break of 4400, the next near-term support lies in the 4350 region. Traders are likely to prefer selling into strength as previous support turns into resistance. On the local economic front, we have Westpac consumer sentiment and wage price index data to look out for. Elsewhere in the region, we have New Zealand retail sales data due out.

On a stock level, we expect to see a mildly firmer start for BHP Billiton, with its ADR pointing to a 0.1% rise to $33.79. BHP has announced the sales of its Ekati diamond mine to Harry Winston for $500 million. Commodities were mostly positive and this might lift the resource names early. Mineral sands miner Iluka has been downgraded to Sell (from Buy) by Goldman Sachs. There are a few companies reporting today with the likes of CSR Limited, DuluxGroup and Singtel set to release earnings. Leighton Holdings has made an announcement regarding its investment in BrisConnections. The significant impairment write-down might put its shares in focus, although the company said it does not expect this to have an impact on underlying profit guidance.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0428 0.0026 0.25%
ASX (cash) 4385 5 0.12%
US DOW (cash) 12747 -5 -0.04%
US S&P (cash) 1374.6 2.0 0.15%
UK FTSE (cash) 5741 -8 -0.14%
German DAX (cash) 7122 -17 -0.23%
Japan 225 (cash) 8653 18 0.21%
Rio Tinto Plc (London) 30.89 0.08 0.24%
BHP Billiton Plc (London) 19.53 0.03 0.14%
BHP Billiton Ltd. ADR (US) (AUD) 33.79 0.04 0.12%
US Light Crude Oil (December) 85.64 0.57 0.66%
Gold (spot) 1724.9 0.8 0.05%
Aluminium (London) 1979 23 1.19%
Copper (London) 7661 62 0.82%
Nickel (London) 16065 170 1.07%
Zinc (London) 2148 0 0.01%
Iron Ore 122.3 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.

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