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IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Risk sentiment was largely positive on Friday as European and US equities posted modest gains. Equities, with low levels of volatility and tight ranges, had a positive close with the S&P up three points to close at 1418. Most of the risk currencies were relatively steady apart from the Aussie crosses. The Aussie dollar was under pressure as AUD/USD dropped to 1.041 and continues to languish at those levels. Australia's Treasury rejected the idea of FX intervention as a means of weakening the Australian dollar on the grounds that it would be ineffective and potentially destabilising. Instead, the Treasury made it clear that if the currency were judged to be too strong, interest rate cuts could be used to induce weakness.

Ahead of the open, we are calling the Aussie market down 0.4% at 4357. It is important to note that CBA, Telstra, JB Hi-fi and UGL are all trading ex-dividend today. As a result, this has taken a big chunk of points out of the market. Data releases are limited today but the week gets busier with eurozone PMIs and RBA minutes due on Tuesday and Fed minutes due on Wednesday. The political scene in the eurozone also gets active this week with German Chancellor Angela Merkel and French president Francois Hollande meeting on August 23 followed by Greek Prime Minister Antonis Samaras meetings with Ms Merkel and Mr Hollande on August 24 and 25 respectively. As a result, there is plenty of event risk on the way.

On a stock level, we expect a firmer start for BHP Billiton, with its ADR pointing to a 0.3% gain to $33.10. The resource space might benefit from a fairly buoyant commodities market on Friday. News that China’s July housing data showed prices of new homes rose in the largest number of cities in 14 months, as sentiment improved after interest rate cuts and incentives for first-time buyers might also help sentiment. Reporting today we have Bendigo & Adelaide Bank, Bluescope Steel, Challenger and Macmahon being the main ones. Bluescope will be closely watched after announcing a joint venture with Nippon Steel last week. Ratings changes will also be in focus following recent results. ASX Limited and Lynas have been downgraded to neutral (from overweight) by JP Morgan.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0434 -0.0041 -0.39%
ASX (cash) 4357 -14 -0.31%
US DOW (cash) 13282 30 0.23%
US S&P (cash) 1420.6 3.5 0.25%
UK FTSE (cash) 5865 12 0.20%
German DAX (cash) 7073 56 0.80%
Japan 225 (cash) 9212 49 0.54%
Rio Tinto Plc (London) 30.39 -0.12 -0.39%
BHP Billiton Plc (London) 19.61 -0.04 -0.22%
BHP Billiton Ltd. ADR (US) (AUD) 33.10 0.10 0.32%
US Light Crude Oil (October) 96.61 1.20 1.26%
Gold (spot) 1618.2 1.6 0.10%
Aluminium (London) 1858 11 0.58%
Copper (London) 7539 71 0.95%
Nickel (London) 15630 63 0.40%
Zinc (London) 1797 12 0.67%

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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