IG Markets - Morning Thoughts And Opening Prices
Risk assets took a breather with risk currencies and equities retreating from their highs. EUR/USD momentarily broke above 1.28, but the lack of any fresh incentives kept it subdued while AUD/USD held its ground above 1.033. With so many key risk events ahead, it just seems markets are entering a period of consolidation with a wait and see approach. The FOMC decision on Thursday, followed by the respective Eurogroup and ECOFIN meetings on Friday and Saturday, should offer further guidance to the FX markets. There is also the German Constitutional Court on Wednesday to look out for and developments from the Troika report. The S&P experienced a key reversal in Monday’s trade and this could be a bearish signal. The S&P printed a new high, but ended up finishing below Friday’s close which could indicate a change in trend.
Ahead of the open, we are calling the Aussie market down 0.4% at 4318. China concerns are likely to remain the dominant theme in Asian trade following the data we received over the past couple of days. The country's trade surplus was wider than expected, but imports contracted by 2.6%, and this (along with news of an Australian coal mine closure) did nothing to boost sentiment towards the Aussie dollar. Weaker imports are often cited as a sign of a consumption slowdown, which will not help hopes for rebalancing in the economy. On the local economic front, we have NAB business confidence due out today.
On a stock level, we
expect a slightly firmer start for BHP Billiton, with its
ADR pointing to a 0.1% rise to $32.48. Iron ore miners will
be in focus yet again today after iron ore prices surged
6.7%, their biggest gain since December 2008. We might see
gold stocks retreat from recent highs today after the
precious metal dropped overnight. CSL will be one to watch
after its Biotherapies unit received a US government
contract for influenza pandemic preparedness and response
with a potential value of $1.5 billion if all optional
activities are exercised. Investors will also be waiting on
the regulatory approval for the Qantas/Emirates
|Market||Price at 6:30am AEST||Change Since Australian Market Close||Percentage Change|
|US DOW (cash)||13239||-31||-0.23%|
|US S&P (cash)||1430.2||-7.4||-0.51%|
|UK FTSE (cash)||5760||-21||-0.36%|
|German DAX (cash)||7179||-31||-0.43%|
|Japan 225 (cash)||8805||-64||-0.73%|
|Rio Tinto Plc (London)||30.70||0.48||1.61%|
|BHP Billiton Plc (London)||19.10||0.04||0.22%|
|BHP Billiton Ltd. ADR (US) (AUD)||32.48||0.02||0.07%|
|US Light Crude Oil (October)||96.27||0.00||0.00%|
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