Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


IG - Morning thoughts and opening prices 18/1/13

Overnight, the US markets rallied strongly as two major pieces of US data surprised to the upside. The S&P 500 was up 0.70% to 1482 heading into the close, as both the US jobless rate and US housing starts data boosted optimism that the world’s largest economy is healing. Housing starts were the biggest surprise, rising 12.1% in December. Watch for US-exposed building stocks such as JHX and BLD pushing higher today, particularly BLD as investors pile into the company after the announced restructure on Wednesday. The better-than-expected US figures are an added bonus to BLD. Oil surged 1.2% to $95.39 a barrel as commodities pared gains on market optimism. Watch the local energy space today; WPL and STO both produced good fourth-quarter results yesterday and a rising oil price will enhance profits, though energy has been a major laggard.

USD/JPY jumped 1.66% after Japan’s Economy Minister Akira Amari’s said the currency ‘has more room to decline’. Rhetoric like this was all shorters needed to jump back into the yen-bearish trade. USD/JPY reached a high of 90.138 overnight before resistance pushed it back into the government-stated trading band of 85-90. We will continue to look to buy dips in USD/JPY leading into the January 21 BoJ meeting. It is excepted that the trade will unravel, with the board anticipated to fail to meet expectations of ‘bold policy moves’, this failure will probably see policy makers increase rhetoric further to ‘we can do more’. AUD/USD fell further overnight as the unemployment data released yesterday added to the continuing signs of weakness in the domestic economy. AUD/USD dropped below $1.049 before pulling back some losses to rest just above $1.05. AUD/USD is currently trading at $1.054 before the open of Asian trade.

To domestic news, and late last night Rio Tinto’s CEO Tom Albanese announced the company will take an approximate $14 billion worth of write-downs after his two largest acquisitions during his tenure failed to deliver, leaving him no choice but to fall on his sword. The two deals: the 2007 take-over of aluminium giant Alcan for $38 billion which was subsequently soured by China’s emergence as the biggest aluminium producer one year later, and the A$3.9 billion take-over of coal producer Riversdale Mining in 2011 has seen up to 75% of value wiped off the balance sheet. This saw RIO’s London listing fall as much as 4.6% in early trade before rallying on the news that current iron ore head Sam Walsh had been appointed as new CEO by the board. RIO Plc finished only half a per cent off at the close. We see this news as short-term pain for a long-term gain. Sam Walsh’s results speak for themselves; he has continued to hit record production levels and kept RIO’s iron ore revenue ticking over under tricky trading conditions. He will also bring a much stricter and disciplined approach to further investment and capital management. Watch for the share price to wobble today before research houses update their ratings; we would expect upgrades here.

Moving to the open and we are calling the ASX 200 up 0.5% to 4784 points as risk assets look to cash in on global news. Investors will look to US-exposed material and capital goods stocks this morning as they see medium-term value returning. One part of the local market that isn’t being discussed is Japanese-exposed stocks. Australia is Japan’s third biggest import market behind the US and China. They are particularly interested in raw materials and energy; watch for Asian-exposed stock such as STO to take advantage of this. With commodities back in the green overnight, we expect a stronger start for BHP with its ADR pointing to a 0.16% rise to 36.40. We would also expect some switching here with Rio providing additional funding in the materials space as investors reassess their positions. After a week of treading water, the market looks like it will finish on yearly highs after carrying itself yesterday. With good global leads today, we see investors going into the weekend with the market on the upside.

MarketPrice at 8:00am AESTChange Since Australian Market ClosePercentage Change
AUD/USD1.05400.0034 0.33%
ASX (cash)478730 0.63%
US DOW (cash)13607140 1.04%
US S&P (cash)1481.614.6 0.99%
UK FTSE (cash)613740 0.65%
German DAX (cash)773253 0.69%
Japan 225 (cash)10875379 3.61%
Rio Tinto Plc (London)34.39-0.19 -0.55%
BHP Billiton Plc (London)20.62-0.15 -0.72%
BHP Billiton Ltd. ADR (US) (AUD)36.400.06 0.16%
US Light Crude Oil (March)95.321.50 1.60%
Gold (spot)1687.288.3 0.49%
Aluminium (London)20484 0.20%
Copper (London)8054108 1.36%
Nickel (London)17600200 1.15%
Zinc (London)201030 1.52%
Iron Ore145.40.0 0.00%

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.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Strike: Lyttelton Port Workers Vote To Escalate Dispute

Members of the Rail and Maritime Transport Union (RMTU) at Lyttelton Port today voted to escalate their industrial action. Around 200 RMTU members have been operating an overtime ban since 17 December and today they endorsed a series of full withdrawals of labour at the port. More>>

ALSO:

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

NASA, NOAA: Find 2014 Warmest Year In Modern Record

Since 1880, Earth’s average surface temperature has warmed by about 1.4 degrees Fahrenheit (0.8 degrees Celsius), a trend that is largely driven by the increase in carbon dioxide and other human emissions into the planet’s atmosphere. The majority of that warming has occurred in the past three decades. More>>

ALSO:

Scoop Business: New Zealand’s Reserve Bank Named Central Bank Of The Year

The Reserve Bank of New Zealand’s efforts to stifle house price inflation by using new policy tools has seen the institution named Central Bank of the year by Central Banking Publications, a publisher specialising in global central banking practice. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news