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IG Markets: Morning Thoughts

IG Markets: Morning Thoughts

Risk assets mostly consolidated with no dominant theme driving sentiment. The euro traded relatively heavy after S&P lowered Greece's outlook to negative, Spain revised budget deficit targets and a 0.9% drop was reported in Germany's June industrial production. Other than that, it was a fairly quiet session for risk assets, with earnings the dominant theme. Looking at the risk currencies, AUD/USD was stuck in a range between 1.054 and 1.058. EUR/USD fell from around 1.24 to lows of around 1.232, which is not much of a move. We could potentially see some big moves in the risk space in the Asian session today with plenty of data due out from China.

Ahead of the open, we are calling the Aussie market up 0.4% at 4329. This is actually quite a hefty gain compared to the moves we saw in US and European markets. Yesterday, the market printed a high of 4323.8 and the bulls will be hoping it can hold above that level. With plenty of data due out from China and some key earnings reports locally, there are plenty of potential catalysts for price action today. Should the market manage to keep moving higher, 4350 is the near-term resistance. On the economic front, we have jobs numbers due out today with the unemployment rate expected to tick up to 5.3% with 10,200 jobs added. Elsewhere in the region, the BoJ concludes its policy meeting today and we do not expect it to announce a full-fledged easing move despite weak Japanese data in recent weeks. China CPI will be in focus today and is expected to show a 1.7% increase in July from a year earlier, the least since January 2010. Such a moderation in inflation would provide more room for monetary policy easing. We also have fixed asset investment, industrial production and retail sales due out from China.

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On a stock level, we expect a firmer start for BHP Billiton, with its ADR pointing to a 1.1% rise to $32.64. Rio Tinto (RIO) reported after market yesterday and it will be one of the main stocks to focus on today. RIO was up nearly 3% in the UK after reporting a US$5.89 billion net profit (-22%) and underlying earnings of US$5.15 billion (-34%) for the first half. Its underlying earnings were ahead of analyst estimates and the stock should be well supported today. The next key level to look out for on RIO is $60. We also had Newscorp reporting a US$1.55 billion fourth-quarter loss after writing down Australian businesses. This might see its shares under pressure today and will also put other media stocks like Fairfax into focus. Telstra has reported full-year results and it seems like a slight miss on NPAT and EBITDA. However, the full-year dividend is in-line with expectations.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0566 0.0022 0.21%
ASX (cash) 4329 16 0.37%
US DOW (cash) 13163 15 0.11%
US S&P (cash) 1402.7 3.4 0.24%
UK FTSE (cash) 5843 39 0.66%
German DAX (cash) 6954 -0 0.00%
Japan 225 (cash) 8891 10 0.11%
Rio Tinto Plc (London) 32.20 0.90 2.86%
BHP Billiton Plc (London) 19.75 0.15 0.75%
BHP Billiton Ltd. ADR (US) (AUD) 32.64 0.36 1.11%
US Light Crude Oil (September) 93.41 0.02 0.03%
Gold (spot) 1612.6 2.9 0.18%
Aluminium (London) 1906.125 10 0.53%
Copper (London) 7526 -11 -0.14%
Nickel (London) 15659.5 -31 -0.19%
Zinc (London) 1904.75 7 0.38%

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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