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

 


IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

The S&P 500 had a very quiet night with most of Asia offline for either Chinese New Year or Foundation Day. Volumes were lower than average and the index only moved through a four point window. Heading to the close the S&P was down one point to 1517.

Europe was again a distraction, as shares slipped and peripheral bonds gained after European finance chiefs met to discuss aid for Cyprus and Greece. Growing political unrest in Spain and Italy continues to stoke the embers of the debt crisis, with Italian 10-year bond yields increasing seven basis points to 4.62% (nearly a two-month high) as the Italian election heats up. The concern with Italy’s bonds is that they sit third behind the US and Japan for total bond on issue. Unlike Japan where most of its bonds are owned by the domestic population, Italy’s bonds are spread far and wide. We believe Europe will continue to be a distraction this year. There are signs that central Europe in particular is growing and that southern Europe is stabilising, however the political arena will continue to stoke fears of economic mismanagement. Mario Draghi has made it abundantly clear that the ECB will do whatever it takes to provide stability to the region and he looks likely to hold his word.

Moving to our region and today and we will see Japan come back online after Foundation Day. Over the weekend USD/JPY moved back below 93 before rebounding hard overnight in US trade to 93.90 (up 1.32%) and is now at the same level it finished on Friday. The correlation between the yen depreciating and the Nikkei appreciating is still holding true, however this has been accelerated by comments from Akira Amari (a candidate for the Governor role) believing the Nikkei should be around 13,000 points come the end of the financial year. That’s three months from now and is a 17% increase from the current point. The Nikkei is following the rhetoric today, pointing to a 2.2% gain to 11,400.

The race for the now-vacant Governor of the Bank of Japan igniting the yen/Nikkei correlation will heat up. The most aggressive of the front runners, Haruhiko Kuroda (currently the head of the Asian Development Bank) is advocating for increases in stimulus and ending deflation to ‘usher in a growth spurt unseen in a generation’. He also believes that a two per cent inflation target is very reachable for 2013 and for some years to come.

If we do see a BoJ Governor of Mr Kuroda’s calibre, USD/JPY could well punch through 95 and would head to 100 very quickly. It would also signal to Japanese consumers and investors alike that the government is finally taking action.

For our market this link will be vital, exports are increasing as noted by the last terms of trade figures and if our market is to ride Japan’s economic revival, Japan needs to increase its own consumption of goods. Remember, Japan is looking at using gas as its major source of energy longer-term (WPL and STO well positioned), it is looking to ramp up manufacturing of its major industries (steel and iron ore will be required) and it wants to return to sustained GDP growth. As Japan’s third major trading partner, the Aussie market is well positioned to take full advantage of this.

Moving to the open, we are calling the ASX 200 up 15 points to 4972, as all eyes turn to one of the largest reporting days. Tomorrow sees the likes of CBA, CSL Computer Share, Leighton Holdings, Oz Minerals and Worley Parsons reporting half-year profits. This will make or break the week and possibly the current rally, as our market does look slightly over brought. CBA and CSL will be the main points of interest, as the fundamentals of these companies look to match up with the current values. Inline results are likely to see both shares holding on to their current gains as the dividend on offer is still a major selling point. It is expected to be a flat day for BHP, with its ADR suggesting it will be unchanged at $37.71 ahead of the Rio result on Thursday. Today will be very interesting to see how much influence Japan has on our market as the local market looks to tomorrow’s reports for leads.
Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0273 -0.0028 -0.27%
ASX (cash) 4975 15 0.30%
US DOW (cash) 13973 -8 -0.06%
US S&P (cash) 1517.6 0.5 0.03%
UK FTSE (cash) 6278 13 0.21%
German DAX (cash) 7629 -20 -0.27%
Japan 225 (cash) 11403 249 2.24%
Rio Tinto Plc (London) 36.56 -0.02 -0.05%
BHP Billiton Plc (London) 21.59 0.03 0.12%
BHP Billiton Ltd. ADR (US) (AUD) 37.71 0.00 0.00%
US Light Crude Oil (March) 97.00 1.33 1.38%
Gold (spot) 1649.55 -18.9 -1.13%
Aluminium (London) 2103 -19 -0.88%
Copper (London) 8199 -86 -1.04%
Nickel (London) 18200 -165 -0.90%
Zinc (London) 2388 -30 -1.25%
Iron Ore 155.1 0.0 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.


www.igmarkets.com

ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: RBNZ Starts Talks On Tougher Rules For Property Speculators

The Reserve Bank of New Zealand is stepping up preparations to restrict lending to residential property investors as it watches house prices, particularly in Auckland, continue to rise strongly. More>>

ALSO:

Research: ‘Ageing Well’ Science Challenge Launched

Science and Innovation Minister Steven Joyce today launched the Ageing Well National Science Challenge, confirming initial funding of $14.6 million. More>>

ALSO:

Scoop Business: Govt Resisting Pressure To Pump More Cash Into Solid Energy

Prime Minister John Key says it is “not the government’s preferred option” to make a fresh capital injection into the troubled state-owned coal miner, Solid Energy, but dodged journalists’ questions at his weekly press conference on whether that might prove necessary... More>>

ALSO:

Lagest Ever Privacy Breach Award: NZCU Baywide Accepts “Severe” Censure In Cake Case

NZCU Baywide says that once it was found to have committed a breach of a former staff member’s privacy, it had attempted to resolve the matter... the censure and remedies for its actions taken almost three years ago are “severe” but accepted, and will hopefully draw a line under the matter. More>>

ALSO:

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

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