IG Markets – Morning Prices

IG Markets – Morning Prices

27 October 2010

On Wall Street overnight, US stocks finished the session largely unchanged, although it was a volatile ride as stocks fell early on the back of weaker-than-expected earnings reports and disappointing housing news. However, as the day developed the market pared losses as the latest consumer confidence report was stronger-than-expected.

As has been theme of late, the NASDAQ continued to outperform, adding 0.3% while the Dow Jones Industrial Average rose 5 points and the S&P 500 was unchanged.

Domestically, the local market is called to open 0.1% softer at 4683 following the flat overnight leads. Across the sectors and leads there were uninspiring too.

We’re likely to see some pressure among material and consumer staples names after they were the underperformers during the US session. UK traders basically ignored a positive set of base metal leads from the London Metals Exchange, with Rio Tinto and BHP Billiton declining 1.2% and 2.5% respectively. BHP’s ADR is calling the Australian listed stock 0.3% lower at $41.71 on the open. Gold names are likely to be relatively flat after gold traded sideways, currently at US$1340.3 per ounce.

Comments from the world’s biggest steelmakers ArcelorMittal and US Steel that demand was slowing, prices were falling and costs rising are likely to hurt the likes of Bluescope Steel and OneSteel.

Elsewhere, we could see some support for financial names after the likes of Bank of America, JP Morgan and Wells Fargo all rallied following their recent sell off on concerns of US mortgage foreclosures. NAB’s result this morning looks to be in line to slightly better than what the market was anticipating; will we see buying strength of will it be a case of ‘sell the fact’?

In summary, the domestic market is looking at a relatively flat open, with participants likely to sit on their hands ahead of the crucial CPI inflation figures at 11.30am.

The CPI read will confirm whether or not we see a rate hike in November by the RBA. Inflation is the key metric the RBA is looking at. As it stands, consensus is for a 0.8% CPI print on the quarter and 2.9% on an annualised basis. If this figure comes in higher-than-expected we will no doubt see the credit markets react as it prices in increased prospects of a rate hike. Its currently assigning a 46% chance. This could see the AUD reclaim the 99c level and perhaps push higher going into the European session.

Elsewhere, the USD clawed back lost ground against all currencies overnight, except sterling which touched a session high of 1.5896 after a stronger-than-expected GDP print and S&P confirming their AAA status. The fact that some of the risk currencies, such as the Euro were not able to hold important support levels perhaps indicates the path of least resistance is higher for the USD.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 0.9853 -0.0062 -0.63%
ASX (cash) 4683 -5 -0.10%
US DOW (cash) 11180 8 0.07%
US S&P (cash) 1187.2 0 0.00%
UK FTSE (cash) 5716 -27 -0.47%
German DAX (cash) 6638 -5 -0.07%
Japan 225 (cash) 9433 5 0.05%
Rio Tinto Plc (London) 41.59 -0.49 -1.16%
BHP Billiton Plc (London) 21.97 -0.56 -2.49%
BHP Billiton Ltd. ADR (US) (AUD) 41.71 -0.12 -0.29%
US Light Crude Oil (Dec) 82.48 0.32 0.40%
Gold (spot) 1340.3 1.0 0.08%
Aluminium (London) 2381 1 0.04%
Copper (London) 8504 24 0.28%
Nickel (London) 23348 -217 -0.92%
Zinc (London) 2619 24 0.92%
RBA Cash Rate to be raised by 25bp (Nov) (%) 46.00 0 0.00%

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.

ENDS

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