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IG Markets opening calls

IG Markets opening calls

Today’s lead for the Australian equity market is positive despite a night of mixed night of economic data in the US. On Friday the S&P 500 closed up 0.3% at 1224.71, just off the recent intraday high of 1127, however the tech heavy NASDAQ closed at its highest level in nearly three years up 0.5%. As a result of the overseas lead we are expecting the Australian market to unwind just above 4700.

In the last couple of week’s expectations of a strong jobs number on Friday had been heightened as the 4 week average of the weekly jobless claims headed lower, however it was disappointing to see November payroll grow 39,000, lower than the 150,000 consensus by economists, private payrolls were equally unspectacular climbing lower than the forecast amount. The unemployment rate also ticked up to 9.8% from 9.6%. Traders also eyed the November non- manufacturing ISM which printed a better than expected 55.0 vs 54.8.

It was impressive that the equity market held up well despite the unemployment numbers and goes some way to show that we could be seeing a slight change of mind set. In recent times traders have been looking at events with a ‘glass half empty ‘ mentality, however it looks like money managers want to push equities higher in the short term, the fact the S&P 500 managed to close higher despite the disappointment these numbers created is positive.

It was interesting though to see the USD coming under severe selling. The Euro pushed up to a high of 1.3438, the AUD pushed back above 99c and the Yen strengthened to 82.53. In recent weeks the USD had been rallying on the back of safe haven flows but also on the growth prospects of the US economy, data of late has shown some turnaround and the weakness we saw in currencies reflects a slight unwinding of expectations. There is also a theory that perhaps with further evidence of anaemic job creation the Federal Reserve could go above and beyond their stated $600b asset purchase program.

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Looking at the drivers for today’s trade and AIG construction index and TD inflation numbers will get some mention but aren’t expected to materially affect trade. Materials will probably be a standout given commodities are up from Friday equity close, as a result BHP and Newcrest’s ADR suggest gains on open. All eyes on this space will be on Riversdale mining (RIV) with London based Daily Telegraph suggesting Rio-Tinto are set to put a bid in at A$15.

The usual drivers will remain in play and an underlying positive bias should be seen, so keep an eye on the risk currencies such as the AUD and Euro, the Nikkei and the Chinese A50 index which could influence intraday trade as well.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 0.9905 0.0148 1.52%
ASX (cash) 4708 14 0.30%
US DOW (cash) 11369 14 0.12%
US S&P (cash) 1224.3 4 0.31%
UK FTSE (cash) 5760 -10 -0.18%
German DAX (cash) 6971 12 0.17%
Japan 225 (cash) 10160 -13 -0.13%
Rio Tinto Plc (London) 44.16 0.01 0.02%
BHP Billiton Plc (London) 24.24 -0.27 -1.08%
BHP Billiton Ltd. ADR (US) (AUD) 44.64 0.05 0.11%
US Light Crude Oil (Jan) 89.44 1.71 1.95%
Gold (spot) 1414.0 24.0 1.73%
Aluminium (London) 2326 -18 -0.77%
Copper (London) 8739 46 0.53%
Nickel (London) 23640 -50 -0.21%
Zinc (London) 2225 -5 -0.22%
RBA Cash Rate to be raised by 25bp (Dec) (%) 1.00 0.00 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

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