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IG Markets Morning Report

IG Markets Morning Report

Good morning,

On Wall Street overnight, stocks gave up most of their early gains in the last few hours of trade as the US dollar index continued its push higher, with both the euro and AUD coming under pressure late. Earlier, an upbeat retail sales report had lifted stocks firmly into positive territory.

The Dow Jones Industrial Average was the best performer, gaining 0.1%. Both the S&P 500 and NASDAQ finished 0.1% and 0.2% lower respectively.

Locally, the ASX 200 is called to open the session unchanged at 4688, just below the psychologically important 4700 level. It’s very difficult to forecast how our market will open today and where the points may come from.

It was a real bag of mixed leads overnight as the materials sector was the worst performer on Wall Street, falling 0.8%. On the London Metals Exchange, base metals were mixed while in normal London trade both Rio Tinto and BHP Billiton added 0.4% and 1.8% respectively. Just to throw a spanner amongst the works, BHP Billiton’s ADR is calling the locally listed stock 0.9% firmer at $44.54. Based on this fact, we’ve got to assume the materials sector will shrug off US leads and be firmer on the open.

The gold miners could continue to come under pressure after gold futures continued to pull back overnight, losing 0.8% to be trading around the US$1358.6 per ounce level.

The other sector where we’re likely to see some action is the financials space. Leads for this sector are cloudy too. Financials were the best performer in the US rising 0.4%. However, given the market is called to open flat, with strength likely coming from the materials sector one would naturally assume some weakness from the financials to offset the materials strength. So to be honest it very difficult to predict how the financials are going to trade. One area of focus will be ANZ, however, after it was just reported that they have missed out on acquiring a 51% stake in Korea Exchange Bank The market has been expecting this purchase to be the next step in their Asian expansion plan so there might be some disappointment among analysts.

Elsewhere, energy names may see some selling after Crude Oil futures fell 0.5% to US$84.63 per barrel.

In summary, it’s very difficult to see how the market will trade on the open given the hugely mixed leads. As the session develops, traders will likely focus on the release of the RBA meeting minutes at 11.30am to gauge the likelihood and timing of further interest rate hikes.

In currency trade, it was a volatile session overnight as traders chose to ignore improving Irish bond yields, instead focusing on stronger US retail sales and a report suggesting intensifying pressure on the Fed to dump its controversial QE2 program. The euro traded as low as 1.3562 while the AUDUSD was sold down to 0.9835.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 0.9843 -0.0011 -0.11%
ASX (cash) 4688 0 0.00%
US DOW (cash) 11211 6 0.05%
US S&P (cash) 1198.4 -2 -0.17%
UK FTSE (cash) 5805 19 0.33%
German DAX (cash) 6783 59 0.88%
Japan 225 (cash) 9858 45 0.46%
Rio Tinto Plc (London) 43.30 0.16 0.36%
BHP Billiton Plc (London) 24.06 0.43 1.84%
BHP Billiton Ltd. ADR (US) (AUD) 44.54 0.40 0.92%
US Light Crude Oil (Dec) 84.63 -0.41 -0.48%
Gold (spot) 1358.6 -10.8 -0.79%
Aluminium (London) 2405 7 0.29%
Copper (London) 8618 13 0.15%
Nickel (London) 22501 -249 -1.09%
Zinc (London) 2335 -11 -0.47%
RBA Cash Rate to be raised by 25bp (Dec) (%) 5.00 -1 -1.00%

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.


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