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IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Risk sentiment remained fairly resilient as investors hoped that Spain would request a full EU/IMF bailout, clearing the way for the ECB to buy Spanish bonds in the secondary market. Helping sentiment was Angela Merkel’s government backing of the ECB’s bond-buying plan announced last week. Most risk assets consolidated in the absence of material data releases and a lack of news reels. The euro touched its highest level against the dollar in over a month, as the exchange rate temporarily climbed above $1.24. AUD/USD failed to breach 1.06 after climbing to a high of 1.0595 before pulling back to finish the session at around 1.0569. The next major resistance for AUD/USD is at 1.0637.

Ahead of the open, we are calling the Aussie market up 0.2% at 4280. The main level to keep an eye on today will be 4288, which was yesterday’s high and also the high from 31 July. As a result, this level presents near-term resistance for the bulls. The main event of the day will be the RBA’s policy decision. With domestic data relatively stable and the lack of material worsening in the global economy, the RBA is widely expected to keep the benchmark rate at 3.5%. Perhaps the RBA’s statement will be of greater importance as we might potentially get some comments on the impact of the strong AUD and how it plans on dealing with it. With the economic calendar relatively light, company earnings are likely to play a pivotal role in the market’s performance this week.

On a stock level, we expect a firmer start for BHP Billiton, with its ADR pointing to a 0.9% rise to $32.28. With key commodities moving higher on the back of China’s pledge to support growth, resource names might be well supported today. Hanlong is reported to be looking to cut its offer for Sundance to 40 cents per share. We have quite a few earnings figures to look out for with Leighton Holdings, Bradken, Cochlear and Transurban all set to report. Bradken has posted a NPAT of $100.5 million, beating analysts’ consensus of $95.2 million. The company has a strong operating cashflow and solid order book. Many analysts had flagged downside risk for the company due to capital expenditure. However, BKN have said they are minimising capital expenditure until the outlook becomes clearer.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0569 0.0000 0.00%
ASX (cash) 4280 7 0.17%
US DOW (cash) 13124 10 0.08%
US S&P (cash) 1394.2 0.4 0.03%
UK FTSE (cash) 5811 19 0.33%
German DAX (cash) 6902 16 0.24%
Japan 225 (cash) 8735 9 0.10%
Rio Tinto Plc (London) 31.08 0.78 2.58%
BHP Billiton Plc (London) 19.39 0.21 1.08%
BHP Billiton Ltd. ADR (US) (AUD) 32.28 0.28 0.87%
US Light Crude Oil (September) 92.11 0.83 0.90%
Gold (spot) 1611.2 3.6 0.22%
Aluminium (London) 1877.5 17 0.91%
Copper (London) 7478 45 0.61%
Nickel (London) 15714.5 52 0.33%
Zinc (London) 1889.125 -3 -0.17%

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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