IG Markets - Morning thoughts

IG Markets - Morning thoughts

Risk assets extended their gains in a relatively quiet session on the headline front. Sentiment was also somewhat supported by dovish comments from Boston Fed President Eric Rosengren, who called for ‘a much more accommodative policy’. Fed Chairman Ben Bernanke, in his prepared statement, did not discuss monetary policy. However, he noted that the US economy is still in a ‘fragile recovery’ phase, but is ‘well placed’ for the future. The near-term outlook for risk assets has improved following stronger-than-expected US July payrolls and hints from Spain's Prime Minister Rajoy that he's willing, at last, to consider applying for full assistance from the EU. In the risk currencies space, the euro remained resilient with EUR/USD trading above 1.24 despite weak economic data in Germany. AUD/USD retreated from its highs in the Asian session and was trading at around 1.055 at the end of the US session.

Ahead of the open, we are calling the Aussie market up 0.5% at 4312. The last time the ASX 200 was above 4300 was on 14 May. The market gains have been capped at around these levels on several occasions in the past and we feel a fairly significant catalyst is needed to get through this region. On the economic front, we have home loans data due out at 11.30am. Perhaps tomorrow is a bigger day on the economic calendar with jobs numbers locally, and a swathe of data from China. Elsewhere in the region, Japan’s Nikkei will be in focus heading into the BoJ's two-day meeting. However, the BoJ is widely expected to keep its policy effectively unchanged. The yen’s weakness over the past few sessions had been on the back of fears of further intervention. In the absence of intervention, USD/JPY could trade heavy in coming sessions.

On a stock level, we expect a firmer start for BHP Billiton, with its ADR pointing to a 0.8% rise to $32.42. On the earnings front, today we have Computershare, Stockland and Rio Tinto to look out for. Bradken might see some re-rating from the brokers following its results and big rally from yesterday. Westfield has been raised to Buy (from Hold) by Deutsche Bank with a price target of $10.70.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0556 -0.0015 -0.14%
ASX (cash) 4312 20 0.48%
US DOW (cash) 13163 43 0.32%
US S&P (cash) 1400.7 7.1 0.51%
UK FTSE (cash) 5814 9 0.15%
German DAX (cash) 6961 59 0.86%
Japan 225 (cash) 8874 71 0.80%
Rio Tinto Plc (London) 31.31 0.23 0.73%
BHP Billiton Plc (London) 19.60 0.22 1.11%
BHP Billiton Ltd. ADR (US) (AUD) 32.42 0.26 0.81%
US Light Crude Oil (September) 93.43 1.59 1.73%
Gold (spot) 1611.8 1.4 0.09%
Aluminium (London) 1906 34 1.83%
Copper (London) 7591.5 132 1.77%
Nickel (London) 15784.5 134 0.85%
Zinc (London) 1907.125 27 1.44%

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.au

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