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IG - Morning thoughts and opening prices 7/1/13

IG - Morning thoughts and opening prices 7/1/13


On Friday night US stocks moved up to their highest levels since December 2007, as the much-watched government employment data was released before the start of trade. The data showed that US employers had picked up employees in December at the same pace as the previous month, even with the ‘fiscal cliff’ negotiations clouding short-term outlooks. The official jobless rate also held firm in December, remaining at 7.7%. This result reinforced the consensus view that the US labour market is slowly but surely healing itself. This positive news trumped the Fed minutes from the day before and helped the S&P 500 add about half of one precent to finish at 1466 points at the close, ending the first trading week of the year up 4.6%. US 10–year treasury bonds lost 0.08% on Friday after touching their highest level since April to be 1.90%, as silver and gold continued to slide. The unemployment data also had a profound effect on the CBOE VIX index, falling another 5% on Friday to a four-month low of 13 and has now dropped 39% in five trading days - its biggest weekly fall on record. Cyclical stocks lead the way with commodities and industrials the biggest movers. The US dollar continues to go from strength to strength against the yen, adding as much as 1.3% to 88.41 - the strongest level since July 2010, and continued the Bank of Japan’s and the Prime Minister Shinzo Abe’s promise to de-value the currency.

Moving to Europe, its Central Bank President Mario Draghi, is expected to return to work this week with the main theme of 2013 to be the extension of the calm his board created during 2012. The ECB will continue to do whatever it takes to end the lingering crisis in the eurozone and this should be backed by policy makers who are expected to keep interest rates as record lows. Over the weekend, several business surveys were released showing cautious signs the eurozone may be edging past the worst of the downturn, the UK however may have actually slipped back into contraction. Friday saw the release of the purchasing managers index (PMI) which showed activity in services in the UK’s biggest sector had actually fallen for the first time since 2011, and at a faster rate than forecasted. The index showed that UK services PMI came in at 48.9 in December, down from 50.2 in November - a stark drop and a worrying concern that the Cameron government is heading into another tough year to get the UK economy going again. The FTSE closed before the news was released and saw it finish at 6089 points up 0.66%. The DAX and the CAC also ended the week positively; the DAX closed at 7776 points the CAC 3730 points. The euro was also stronger, up 0.2% to $1.308, but finished the week down after reaching $1.3299 on Wednesday. GBP/USD 1.61 is lower by 0.19% on the back of the PMI figures.

The S&P GSCI Commodities gauge fell 0.5%, lead by silver which dropped 3.2%. With the release of the Fed minutes for December on Thursday, gold continued to slide and completed its longest losing streak since 2004, down 1.6% to be trading at US$1626 an ounce - its lowest level since August.

Moving to our market and with the ASX 200 having its best opening to a year since 2009 last week, that trend looks like it will continue today with the market set to rise by about 0.42% to 4743 points. With iron ore now at $153.30, up 33% since December and 77% since September, mining stocks look set to continue their strong gains over the coming weeks, however BHP’s ADR is currently matching unchanged from its Friday close at $37.91. As we head into the first complete trading week of the year, volumes and market activity look set to return to normal.

MarketPrice at 10:00am AESTChange Since Australian Market ClosePercentage Change
AUD/USD1.04720.0036 0.34%
ASX (cash)474320 0.42%
US DOW (cash)1342658 0.43%
US S&P (cash)1463.67.5 0.52%
UK FTSE (cash)610166 1.09%
German DAX (cash)777833 0.43%
Japan 225 (cash)1074660 0.57%
Rio Tinto Plc (London)36.14-0.45 -1.23%
BHP Billiton Plc (London)21.82-0.18 -0.80%
BHP Billiton Ltd. ADR (US) (AUD)37.910.00 0.00%
US Light Crude Oil (February)93.191.02 1.10%
Gold (spot)1656.405.7 0.35%
Aluminium (London)2060-56 -2.65%
Copper (London)8085-79 -0.97%
Nickel (London)1735545 0.26%
Zinc (London)2040-48 -2.30%
Iron Ore153.33.5 2.34%

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.

www.igmarkets.com

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