IG Markets: Morning Prices

On Wall Street overnight, US stocks finished the session mixed after hitting multiyear highs and despite positive economic news in the form of stronger-than-expected factory orders and comments from the FOMC minutes saying the economy hadn’t improved enough to alter its economic stimulus program.

On the upside, the Dow Jones Industrial Average was the standout, adding 0.2%. The technology-heavy NASDAQ was the weakest performer, down 0.4% while the broad-based S&P 500 detracted 0.1%.

Locally, the ASX 200 is actually called to open the session slightly firmer, up 0.1% at 4745 despite the mixed US leads and slump in commodity prices.

Across the sectors, the focus is likely to be on those exposed to the commodities space following significant overnight weakness. On the London Metals Exchange, base metals were all down between 0.1% and 1.6%, with copper the worst performer. However, this didn’t translate into selling during the London equities session with Rio Tinto and BHP rising 0.4% and 0.1% respectively. BHP’s ADR is only calling the locally listed entity 0.1% weaker which indicates there may not be too much pressure on the diversifieds.

However, it looks like we could see a fair bit of selling among smaller caps and more pure play miners, especially those exposed to the precious metals complex. Some of the safe haven money that had flowed into gold and silver looks to be headed toward riskier asset classes like equities. Consequently we saw gold slump 2.5% to US$1380.7 and silver dropped more than 5% to around the US$29.80 level.

Elsewhere, the energy sector could see some pressure after crude oil futures slid 2.6% to US$89.32 as traders looked to lock in strong profits from the December period.

Financial names could add some points to the index after the US sector finished relatively flat. With reports suggesting flood waters in Queensland have started to recede, perhaps yesterday’s associated weakness could be used as a buying opportunity today.

In summary, it looks like the market is set for a relatively flat open, although we the potential for further selling among those stocks exposed to commodities. In the currency markets, the AUDUSD saw a significant bout of profit taking following a very strong period of outperformance. It hit an overnight low of 1.0027 and it now hovering around the 1.0050 level. We also saw the euro retreat as well, falling to 1.3291 from highs of 1.3430.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0054 -0.0050 -0.49%
ASX (cash) 4745 2 0.05%
US DOW (cash) 11687 24 0.20%
US S&P (cash) 1270.4 0 0.00%
UK FTSE (cash) 6026 48 0.81%
German DAX (cash) 6974 -2 -0.02%
Japan 225 (cash) 10393 -10 -0.10%
Rio Tinto Plc (London) 45.02 0.16 0.35%
BHP Billiton Plc (London) 25.54 0.02 0.10%
BHP Billiton Ltd. ADR (US) (AUD) 45.41 -0.04 -0.09%
US Light Crude Oil (Feb) 89.32 -2.36 -2.57%
Gold (spot) 1380.7 -35.85 -2.53%
Aluminium (London) 2470.00 -8 -0.32%
Copper (London) 9568.00 -154 -1.58%
Nickel (London) 25000.00 -100 -0.40%
Zinc (London) 2445.00 -3 -0.12%
RBA Cash Rate to be raised by 25bp (Feb) (%) 9.00 0.0 0.00%

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