IG Markets - Morning Prices Nov 20
Markets were largely risk-on throughout European and US trade as optimism that US politicians would find middle ground on the fiscal cliff helped spur a rally. Confidence is growing that a deal can be reached, as politicians from both parties continue to make some positive comments on working together to come up with a solution. Better-than-expected existing home sales data also helped to lift sentiment along with optimism that Greece will receive the next tranche of aid. As a result we saw gains of around 2% and above in US and European equities. Risk currencies also echoed big moves with AUD/USD surging to a high of 1.0418 and remaining steady above 1.04. EUR/USD spiked to a high of 1.282 after having languished below 1.28 for a while.
Ahead of the open, we are calling the Aussie market up 0.6% at 4389. It is likely to be a typical risk-on day with cyclical names leading the charge higher. Recently beaten down names in the industrials, materials and consumer space are likely to experience the biggest gains, while defensive names underperform. On the economic calendar, we have the RBA’s monetary policy meeting minutes due out at 11.30am. After the RBA decided to keep rates on hold this month, the minutes will be highly sort after as investors search for clues on whether we will finish off the year with another rate cut. Following the RBA’s statement, which accompanied the last rate decision, it certainly seems like it is happy with the current rate setting going into next year. The commentary will put the Aussie dollar firmly in focus, with AUD/USD eyeing the 1.044 level. Elsewhere in the region, Japan will be closely watched with the BoJ’s monetary policy statement and press conference set to hit the wires.
On a stock level, we expect to see a firmer start for BHP Billiton, with its ADR pointing to a 1.6% rise to $33.76. After a strong session for commodities, we are bound to see gains across the board in the resource space. Arrium will be in focus after yesterday’s trading update. The stock has been upgraded by Deutsche Bank to Hold (from Sell) and we are likely to see other brokers react to the trading update. Qantas will also remain in focus with the AFR reporting that the Emirates tie-up could be in doubt if an alternative proposal emerges. The airline has been subject to several headlines recently and this might continue to keep some investors at bay. Boart Longyear has been downgraded to Underperform (from Neutral) following yesterday’s earnings downgrade.
Market Price at 8:00am
AEST Change Since Australian Market
AUD/USD 1.0415 0.0037 0.36%
ASX (cash) 4389 27 0.62%
US DOW (cash) 12771 144 1.14%
US S&P (cash) 1386.9 20.1 1.47%
UK FTSE (cash) 5734 82 1.45%
German DAX (cash) 7119 105 1.50%
Japan 225 (cash) 9215 47 0.52%
Rio Tinto Plc (London) 30.25 0.91 3.09%
BHP Billiton Plc (London) 19.42 0.69 3.70%
BHP Billiton Ltd. ADR (US) (AUD) 33.76 0.55 1.64%
US Light Crude Oil (December) 89.14 1.31 1.49%
Gold (spot) 1732.6 9.8 0.57%
Aluminium (London) 1977 -13 -0.67%
Copper (London) 7780 -34 -0.44%
Nickel (London) 16428 50 0.31%
Zinc (London) 2194 -35 -1.61%
Iron Ore 122.8 0.00 0.00%
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