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IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Risk assets charged higher on Friday, mainly on the back of the better-than-expected US employment report for July. While the unemployment rate did tick higher to 8.3%, the 163,000 rise in non-farm payrolls dampened the risk of further Fed easing ahead of the Jackson Hole conference later this month and the September FOMC meeting. EUR/USD managed to squeeze higher beyond 1.23, feeding off the improved tone in the equity and peripheral bond markets. Other risk currencies also benefited, with AUD/USD rallying to a high of 1.05708.
Ahead of the open, we are calling the Aussie market up 1.4% at 4282. This is based on Saturday morning’s close for the futures, and we don’t expect too much of a variation from this figure considering the strength we have seen in risk currencies this morning. Commodity markets staged a strong bounce with a big gain for oil, while gold was back above $1600. The improved risk sentiment should continue to support risk assets in today’s Asian session. AUD/USD is close to testing last week’s high of 1.058 when it spiked higher ahead of Mario Draghi’s comments. The pair has established itself above 1.05 now and near-term support is at around 1.0522. On the economic front, we have ANZ job ads and the MI inflation gauge. These are generally low impact announcements and focus is likely to remain on tomorrow’s RBA decision. Japan’s Nikkei might outperform today as the yen struggled and was the weakest performing currency on Friday.

On a stock level, we expect a strong start for BHP Billiton, with its ADR pointing to a 2.8% rise to $32.17. Energy stocks will be well supported by the sharp rise in crude oil prices. Rio Tinto will be in focus on reports it may increase its dividend by 34%. The Australian Financial Review reported that Silver Lake Resources and Integra may combine as early as today. As a result, the two stocks will be closely watched today. Resmed has been upgraded to outperform by Credit Suisse following its results last week. The stock was trading at a four-year high in the US and is one to watch today.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0570 0.0090 0.85%
ASX (cash) 4282 60 1.43%
US DOW (cash) 13108 212 1.64%
US S&P (cash) 1393.1 26.3 1.92%
UK FTSE (cash) 5782 117 2.06%
German DAX (cash) 6880 268 4.05%
Japan 225 (cash) 8689 133 1.56%
Rio Tinto Plc (London) 30.31 1.21 4.16%
BHP Billiton Plc (London) 19.19 0.62 3.31%
BHP Billiton Ltd. ADR (US) (AUD) 32.17 0.87 2.78%
US Light Crude Oil (September) 91.02 3.39 3.87%
Gold (spot) 1603.3 13.4 0.85%
Aluminium (London) 1859.5 14 0.76%
Copper (London) 7428.375 84 1.14%
Nickel (London) 15609.5 251 1.63%
Zinc (London) 1888.125 25 1.33%

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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