IG Markets - Morning Thoughts
IG Markets - Morning Thoughts
Risk sentiment was largely driven by a slew of data releases from Europe and the US. In the European session, risk assets were supported by better-than-expected Q2 GDP data from Germany, France, and the Netherlands. EUR/USD relinquished its early gains following the weak German ZEW survey economic sentiment index, which fell to -25.5 (consensus -19.3). In the US session, the greenback was buoyed by a strong retail sales reading, resulting in risk assets giving up some of their early gains. US retail sales grew by 0.8% month-on-month in July, the first gain in four months, beating expectations of a 0.3% increase. This helped to lower market expectations of another Fed QE programme. AUD/USD dipped to a low of 1.048 and seems to be struggling to get back above 105.
Ahead of the open, we are calling the Aussie market relatively flat at 4289. After seeing risk assets lose ground and give up early gains in the US session, it seems the momentum is currently lower. As a result, we wouldn’t be surprised to see the Aussie market face further downside early in the Asian session. On the economic front, we have Westpac consumer sentiment and wage price index data due out. This data is not likely to be market moving and investors are likely to remain fixated on the earnings reports due out today.
On a stock level, we expect a soft start for BHP Billiton, with its ADR pointing to a 0.3% fall to $32.85. Rio Tinto will be trading ex-div today, so we expect to see it also trade lower. On the reporting calendar today we have Commonwealth Bank, OZ Minerals and Westfield Group. CBA’s cash earnings of $7.11 billion were roughly in-line with consensus as well as the $1.97 dividend. At face value, the CBA result looks to be in-line with expectations; the question now is whether this is enough to justify it continuing to trade at a premium to its peers. After recent reports, broker ratings changes will be something to keep an eye on. UGL has been downgraded by Macquarie to underperform.
Market Price at
6:30am AEST Change Since Australian Market
Close Percentage Change
AUD/USD 1.0491 -0.0029 -0.28%
ASX (cash) 4289 -3 0%
US DOW (cash) 13155 -48 -0.36%
US S&P (cash) 1405.2 -4.9 -0.35%
UK FTSE (cash) 5848 -15 -0.25%
German DAX (cash) 6959 -6 -0.08%
Japan 225 (cash) 8951 21 0.24%
Rio Tinto Plc (London) 31.90 -0.14 -0.44%
BHP Billiton Plc (London) 19.80 0.01 0.04%
BHP Billiton Ltd. ADR (US) (AUD) 32.85 -0.10 -0.29%
US Light Crude Oil (September) 93.35 0.20 0.22%
Gold (spot) 1599.9 -12.9 -0.80%
Aluminium (London) 1858 -3 -0.16%
Copper (London) 7433 14 0.19%
Nickel (London) 15477 70 0.45%
Zinc (London) 1867 1 0.03%
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