IG Markets - Morning Thoughts
IG Markets - Morning Thoughts
The much anticipated Jackson Hole symposium has passed, and it seems we are in for an interesting session as the Asian region digests Fed Chief Ben Bernanke’s speech. Equities initially found Mr Bernanke’s speech disappointing given lack of concrete action. However, they quickly reversed course with markets focusing his 'grave concern' about the weak labour market and then on a Hilsenrath article which outlined why September easing is increasingly likely. Despite the improved sentiment from the developments in the US, market participants will also be digesting some economic data out of China. China PMI for August came out weaker than expected at 49.2 (versus consensus of 50), with the new orders index dropping to 48.7. EUR/USD spiked to 1.2638 but has since retreated and is trading at around 1.258 this morning.
Ahead of the open, once again we are calling the Aussie market up 0.3% at 4330. The Aussie dollar gapped lower this morning as market participants reacted to the data out of China. AUD/USD closed at around 1.032 on Saturday and opened near1.028 this morning. With China manufacturing PMI unexpectedly shrinking for the first time in nine months, regional markets could struggle to gain traction today and fail to hang on to early gains. Investors will be hoping to hear some comments on China easing after Premier Wen pledged to deliver on growth targets. On the local economic front we have retail sales data and ANZ job ads due out this morning. China services/non-manufacturing PMI are also due out today. It is going to be a big week for the Aussie dollar with China in focus and some key data releases on the calendar. Tomorrow we have the RBA’s interest rate decision and then labour data due out later in the week.
On a stock level, we expect a softer start for BHP Billiton, with its ADR pointing to a 0.1% fall to $31.95. The stock will be trading ex-dividend today and this will take a chunk of points out of the market. Gold prices soared to around $1692 and this could see the gold miners outperform today, particularly in the mid-tier space. The retail sales data will put the retailers (Harvey Norman, David Jones, JB Hi-fi and Myer) in focus.
Market Price at 6:30am
AEST Change Since Australian Market
Close Percentage Change
AUD/USD 1.0298 -0.0037 -0.36%
ASX (cash) 4330 14 0.32%
US DOW (cash) 13094 35 0.26%
US S&P (cash) 1408.8 1.5 0.11%
UK FTSE (cash) 5722 -4 -0.07%
German DAX (cash) 6965 -9 -0.13%
Japan 225 (cash) 8886 -98 -1.09%
Rio Tinto Plc (London) 27.36 -0.38 -1.36%
BHP Billiton Plc (London) 18.37 -0.68 -3.57%
BHP Billiton Ltd. ADR (US) (AUD) 31.95 -0.04 -0.13%
US Light Crude Oil (October) 96.41 1.14 1.20%
Gold (spot) 1691.1 31.6 1.90%
Aluminium (London) 1902 26 1.39%
Copper (London) 7615 29 0.38%
Nickel (London) 15950 -122 -0.76%
Zinc (London) 1846 9 0.49%
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