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IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Overnight, US stocks finished only modestly higher as the US ‘fiscal cliff’ circus kicked into high gear. After a convincing move higher in the previous session on the back of some encouraging words from President Obama and Republican leader John Boehner, overnight trade saw both parties once again accusing the other for a lack of progress and a refusal to put anything substantive on the table. As each side of party leaders held press conferences to point the finger across the aisle, markets pulled back from their earlier highs to finish with modest gains. One prominent commentator described the day’s event as being akin to a skit from ’Saturday Night Live‘, with many now convinced that negotiations will mirror that of last August’s ‘debt ceiling’ disaster and go right down to the wire. As a result, a choppy last month of the year is probably the most likely scenario, disappointing those hoping for a Santa Claus rally.

Unfortunately, the day’s political dramas overshadowed another day of pretty encouraging US economic data. Pending home sales rose 5.2% in October, surging to their highest level in more than five years, while Q3 GDP was revised up to an annualised pace of 2.7% from a previous level of 2%. Weekly jobless claims also continued to recover from their post-Hurricane Sandy spike, falling to 393,000 from 416,000. The big fear however, is that all the improvement in recent US economic data could be jeopardised and reversed if lawmakers fail to promptly resolve the fiscal cliff predicament.

Turning to the local session, the ASX 200 is set to finish the last trading day of the week on the front foot opening approximately 27 points or 0.6% higher at 4503, the benchmark’s first move above the 4500 level since November 8. Gains are expected to be relatively broad based, but paced once again by the major miners. With base metals broadly higher and a slight risk on bias to trade, BHP’s ADR is calling the local stock up 1.2% at $34.61. However, as is always the case on a Friday, particularly in a volatile market environment, investors are expected to be cautious. They could very well decide to close positions heading into the weekend, preferring to see how European and US markets finish their weeks, before looking at the market with a fresh set of eyes on Monday. Investors may also want the benefit of seeing European CPI and employment data, Chicago PMI and the latest Chinese manufacturing PMI print, all due out after our close.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0432 -0.0042 -0.40%
ASX (cash) 4503 25 0.55%
US DOW (cash) 13024 1 0.01%
US S&P (cash) 1418.3 1.5 0.11%
UK FTSE (cash) 5868 30 0.51%
German DAX (cash) 7397 -18 -0.24%
Japan 225 (cash) 9453 43 0.46%
Rio Tinto Plc (London) 30.88 1.48 5.02%
BHP Billiton Plc (London) 19.71 0.37 1.91%
BHP Billiton Ltd. ADR (US) (AUD) 34.61 0.40 1.18%
US Light Crude Oil (January) 87.78 0.95 1.09%
Gold (spot) 1725.8 5.8 0.34%
Aluminium (London) 2059 54 2.67%
Copper (London) 7905.75 117 1.51%
Nickel (London) 17021.5 19 0.11%
Zinc (London) 2220.25 25 1.14%
Iron Ore 116.9 -1.00 -0.85%

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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