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IG -Morning Thoughts And Opening Comments

IG -Morning Thoughts And Opening Comments

Good morning

Overnight, US markets posted moderate losses, extending the negative momentum established after the previous session’s FOMC decision and statement. This also occurred amidst ongoing jitters over the status of fiscal cliff negotiations.

It appears markets are still recalibrating their future interest rate expectations in light of the Fed’s decision to move from a ‘calendar-based’ timeframe to a ‘data-based’ timeframe for determining monetary policy. With these new economic parameters in place (unemployment greater than 6.5%/inflation less than 2.5%), markets now have more definitive goal posts to focus on rather than some distant date nearly three years down the track. This has numerous market players speculating that these new metrics may be triggered before the previously advised ‘late-2015’ and thus factoring in an earlier-than-expected tightening of monetary policy.

In addition to these tighter monetary policy concerns, investors also seemed to express heightened disappointment and frustration over the progress on the fiscal cliff negotiations. Once again, the US session featured Republicans and Democrats sniping at each other and stubbornly refusing to give ground on their main ideological stances – Republicans on taxes and Democrats on spending and entitlements. Many in Washington expressed the view that a deal looks further away than it did 48 hours ago.

Turning to the local market, the ASX 200 is set to begin the final trading day of the week on the back foot with a marginal loss on the open – down 10 point or 0.2% at 4572. In contrast to the last few days, materials names are expected to take a breather today with a slight pullback on the cards after modest but broad weakness across most commodity markets last night. While iron ore prices once again edged higher (and now sit at $124.40), most base metals were weaker with BHP’s ADR suggesting at 0.4% lower open at $35.86 for our largest company. While materials names may open lower, the HSBC Flash Chinese manufacturing PMI print just after midday is likely to dictate sentiment heading in to the afternoon. As with most Fridays, traders are likely to be cautious today with many probably happy to lighten exposures heading in to the weekend, particularly with the broader market oscillating around its highs for the year.

MarketPrice at 8:00am AESTChange Since Australian Market ClosePercentage Change
AUD/USD1.0524-0.0004 -0.04%
ASX (cash)4578-5 -0.12%
US DOW (cash)13167-108 -0.81%
US S&P (cash)1423.1-11.3 -0.78%
UK FTSE (cash)5923-7 -0.12%
German DAX (cash)7578-36 -0.47%
Japan 225 (cash)9745153 1.60%
Rio Tinto Plc (London)33.390.30 0.90%
BHP Billiton Plc (London)20.720.18 0.86%
BHP Billiton Ltd. ADR (US) (AUD)35.86-0.14 -0.40%
US Light Crude Oil (January)86.230.41 0.48%
Gold (spot)1697.08-13.8 -0.81%
Aluminium (London)211840.20%
Copper (London)8043-63-0.78%
Nickel (London)17663-118-0.66%
Zinc (London)229740.15%
Iron Ore126.41.401.12%

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.

Market Strategist


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