IG Markets Morning Prices

Good morning,

In the US overnight, stocks snapped their six day winning streak to finish the session modestly lower as the US dollar jumped on renewed European sovereign concerns. Nonetheless, these concerns were partially offset by inline to stronger than expected economic data.

The broad-based S&P 500 was the worst performer, down 0.5% while the NASDAQ fell 0.4% and the Dow Jones industrial Average 0.2%.

Domestically, the Australian market is called to open the session 0.2% softer at 4760 following the widespread weakness overnight. We’re likely to see most of the local market come under some minor selling pressure after nearly all US sectors finished in the red.

Financial and material names are likely to see most of the selling after they led the US session south, both down 0.5%. Apart from Nickel, base metals were all lower on the London Metals Exchange, pressured by the stronger US dollar while in normal London trade, Rio Tinto and BHP saw mixed fortunes, down 0.2% and up 0.2% respectively. BHP’s ADR is calling the locally listed entity to open 0.3% lower at $45.21. Gold names will likely be among the decliners after the yellow metal fell 1% to US$1381.1/oz.

Sentiment towards US financials certainly isn’t going to help the local names. Bank of America, JP Morgan and Citigroup were all down more than 0.9% while Morgan Stanley 1.6% after Goldman Sachs slashed its EPS view for the bank from 55 cents a share to 35 cents. Nomura also chimed in, cutting their EPS forecast to 30 cents from 40. On the upside, Goldman’s upgraded its rating for US asset managers to “attractive” and boosted price targets across the sector by an average of 19%.

Elsewhere, US energy names saw some selling but a rise of 0.7% for crude oil since 4pm yesterday could help offset some of the weakness.

In summary, it looks like we could see some broad-based weakness today as the market continues to take a breather following the recent push higher. With very little in the way of market moving economics, sentiment is likely to be driven by Asia’s reaction to the fresh European concerns.

In currency markets, risk currencies were driven lower overnight as a perfect storm saw the USD higher across the board. The Euro was the key influence on other currencies, tumbling from a high of around 1.3378 to 1.3214 (at time of writing); there was very little to support the single currency. Euro weakness followed a comment from Moody’s suggesting Spain’s Aa1 rating was on review for a possible downgrade and S&P saying they may also lower Belgium’s rating if the government can’t stabilize debt. Also, a poor bond auction in Portugal did little to inspire confidence.

On the other side of the equation, stronger-than-expected US economic data saw bond yields push higher, encouraging further USD strength.

With the AUD following the path of the Euro, the domestic currency shed more than 100 pips from yesterdays equity market close. There is little economic data to drive the AUD today as MI inflation expectations and the RBA bulletin are unlikely to move the market. We may see sideways action today until European trade kicks in, which could bring a more definitive direction.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 0.9858 -0.0096 -0.96%
ASX (cash) 4760 -7 -0.15%
US DOW (cash) 11472 -2 -0.01%
US S&P (cash) 1236.6 -4 -0.33%
UK FTSE (cash) 5880 2 0.03%
German DAX (cash) 7007 -16 -0.22%
Japan 225 (cash) 10323 15 0.15%
Rio Tinto Plc (London) 44.30 -0.10 -0.23%
BHP Billiton Plc (London) 25.25 0.05 0.18%
BHP Billiton Ltd. ADR (US) (AUD) 45.21 -0.14 -0.31%
US Light Crude Oil (Jan) 88.47 0.59 0.68%
Gold (spot) 1381.1 -14.4 -1.03%
Aluminium (London) 2326 -24 -1.02%
Copper (London) 9067 -93 -1.02%
Nickel (London) 24550 160 0.66%
Zinc (London) 2245 -45 -1.97%
RBA Cash Rate to be raised by 25bp (Feb) (%) 9.50 -1.50 -1.50%

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.

ENDS

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