IG Markets - Morning Thoughts
IG Markets - Morning Thoughts
It was a fairly quiet session for risk assets apart from the euro which was well bid in all crosses. EUR/USD rallied back above 1.25, printing a high of 1.2577, while other risk currencies like AUD/USD (1.0350 to 1.0390) remained in relatively tight ranges. The big news was that EU President Herman Van Rompuy fully endorsed the ECB's proposal for bond-buying and expressed confidence that the plan, if used, will be ’very effective‘. However, there was still no indication that a request from Spain for more EU aid is imminent. Mariano Rajoy confirmed that there are ‘no ongoing talks’ on Spanish bailout and added that Spanish banks will need less than the €100 billion aid already sanctioned by the EU. Data in the US was mixed with the consumer confidence index dropping, but manufacturing activity contracted at a less pronounced rate in August. With mixed signals from economic data continuing, many market participants are happy to remain on the sidelines ahead of the Jackson Hole symposium.
Ahead of the open, once again we are calling the Aussie market relatively flat at 4359. Apart from the small move higher into the close yesterday, it was a quiet session with the market oscillating around 4350. Looking at the leads from the US session, we wouldn’t be surprised if it’s yet another quiet day in the region. On the local economic front we have construction work done due out at 11.30am.
On a stock level, we expect a softer start for BHP Billiton, with its ADR pointing to a 0.8% fall to $32.83. The recent iron ore price slide is likely to keep the big resource name on the defensive. Iron ore slid to US$94.80 per tonne and this will undoubtedly be highlighted by the mining boom pessimists. Energy stocks will remain in focus following the recent volatility in oil prices. Newcrest Mining will be closely watched after the company’s shares took a hit yesterday following the suspension of Lihir gold mine after a dispute with landowners. Reporting today we have Worley Parsons, Ausdrill, Medusa Mining and Transfield.
Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0378 0.0014 0.14%
ASX (cash) 4359 -1 -0.02%
US DOW (cash) 13100 -18 -0.13%
US S&P (cash) 1411.7 0.4 0.03%
UK FTSE (cash) 5765 -9 -0.15%
German DAX (cash) 7001 -9 -0.12%
Japan 225 (cash) 9043 9 0.10%
Rio Tinto Plc (London) 28.62 -0.49 -1.67%
BHP Billiton Plc (London) 19.32 -0.01 -0.04%
BHP Billiton Ltd. ADR (US) (AUD) 32.83 -0.27 -0.80%
US Light Crude Oil (October) 96.24 0.95 1.00%
Gold (spot) 1667.4 7.7 0.46%
Aluminium (London) 1909 9 0.49%
Copper (London) 7611 17 0.22%
Nickel (London) 16302 -74 -0.45%
Zinc (London) 1976 23 1.20%
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