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IG - Morning Thoughts And Opening Prices

IG - Morning Thoughts And Opening Prices

Good Morning

Overnight the US market pulled back gains after reaching levels not seen since pre-GFC, with the S&P500 off 0.39% to 1460 as the US earnings season fast approaches. Alcoa will unofficially be the first company to report after the close of the US market tomorrow, with most analysts expecting around 3% growth in quarterly profits for S&P 500 companies. All but one sector of the top 500 companies fell last night, lead by utilities, energy and consumer staples. Bank of America lost 0.6% after releasing a statement to the market that it has agreed to refinance Fannie Mae’s $3.6 billion home-loan repurchasing claims as well as paying out $6.75 billion to repurchase residential mortgages sold to Fannie Mae. The deal ’will substantially resolve outstanding claims for compensatory fees between the two companies‘.

In Europe, all eyes were on Basel Switzerland last night as international regulators met to discuss international credit regulations. The committee agreed to relax some of the credit laws established over the previous years to allow growth to continue in the sector. This saw European banks rise with Credit Agricole up 3.5% in Paris and Commerzbank higher by 4.2% in Frankfurt. However, most other European sectors faded and saw the majors finish the day down. The FTSE, DAX and CAC were off about half of per cent.

It was a better night for commodities with speculators increasing their bullish activity as signs that both China and the US are growing. This saw commodities rise for the fourth consecutive week. The S&P GSCI index advanced 0.4% and sees it up 4.2% since reaching its three-month low in November, lead mainly by soft commodities such as soybeans and wheat as production is tightened. Gold however continued to weaken off 0.54% to $1647 an ounce, while WTI Crude held firm to remain at $93.21 a barrel.

The euro rose for a second consecutive day against the dollar after it dropped under the 50-day moving average. The euro moved up 0.3% to $1.3112 during US trade after falling to $1.2998 - its lowest level in a month. The yen also strengthened over night after reaching its lowest level against the greenback since July 2010. At the end of US trade, USD/JPD was around Y87.783.

Moving to our market and Nathan Tinker’s Whitehaven Coal will look to recover the remaining ground lost after yesterday’s hoax media release which saw AU$314 million in value being wiped off the company. In statements, both WHC and its main creditor ANZ have reaffirmed their commitment to WHC’s projects in New South Wales as ASIC and ASX look to deal with their third market manipulation hoax in 12 months.

Looking to trade this morning and despite having soft leads from Europe and the US, the ASX 200 futures see the Australian market matching up 0.18% to 4726 points. Iron ore continues to hold firm at $153 a tonne and BHP’s ADR is matching up this morning to 37.91 up 0.27% after coming off seven-month highs over the past few days. Pure plays such as FMG and AGO are also expected to perform well today. AUD/USD also looks to continue its good run with the risk-on trade definitely switched on, with it currently trading at $1.0503.

MarketPrice at 8:00am AESTChange Since Australian Market ClosePercentage Change
AUD/USD1.05060.0036 0.34%
ASX (cash)47269 0.18%
US DOW (cash)13388-5 -0.04%
US S&P (cash)1460.31.0 0.07%
UK FTSE (cash)6071-18 -0.30%
German DAX (cash)7734-26 -0.34%
Japan 225 (cash)10625-9 -0.08%
Rio Tinto Plc (London)35.76-0.37 -1.02%
BHP Billiton Plc (London)21.69-0.13 -0.61%
BHP Billiton Ltd. ADR (US) (AUD)37.910.10 0.27%
US Light Crude Oil (February)93.240.40 0.43%
Gold (spot)1648.35-10.0 -0.60%
Aluminium (London)20729 0.41%
Copper (London)8088-1 -0.02%
Nickel (London)17324-136 -0.78%
Zinc (London)2021-19 -0.93%
Iron Ore153.90.6 0.39%

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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