IG Markets Morning Prices 11/8/11

In the US overnight, stocks gave up all of the previous session’s gains as aggressive selling quickly returned to markets as participants worried over the European debt situation. France was firmly in the crosshairs as the market speculated that they may be the next nation to lose their triple A-rating, despite all three of the ratings agencies saying it was safe.

The Dow Jones Industrial Average was the worst performer, down 4.6% while the broad-based S&P 500 and NASDAQ lost 4.4% and 4.1%.

Locally, the ASX 200 is called to open the session 3.6% lower at 3991 following the rout on global market overnight. The selling will once again be indiscriminate as all US sectors finished well into the red.

Financials will probably be hit the hardest after they were smashed overnight, with the US financials sector slumping 7%. The rout started in Europe as both Societe Generale and BNP Paribas plummeted amid speculation France was about to lose its triple-A rating. That sentiment quickly spread across the Atlantic as the likes of Goldman Sachs, Bank of America, Citigroup and Well Fargo were all down between 7.7% and 10.9%.

Industrial and energy names will be hit hard as well after both US sectors fell 5.1% and 3.5% respectively. Industrial giants Boeing, Caterpillar and Deere & Co. were all down between 4.1% and 7.9%. Energy names were hit hard despite a rise in crude oil futures; they rose 0.55% to US$82.09/bbl from our 4.30pm close as the weekly crude oil inventories report showed a huge fall in stockpile levels. They lost 5.2 million barrels versus an expected rise of 1.7 million barrels.

Material stocks will be among the biggest losers once again after the US sector fell 3.4%. Base metals were all down between 1.9% and 38% while Rio Tinto and BHP slumped 5.6% and 5.5% respectively in London equities trade. BHP’s ADR is calling the locally listed stock 1.8% lower at $36.93.

In summary, the market is set for another indiscriminate bloodbath today as overseas markets lost all of yesterday’s gains on renewed panic and fear over debt contagion in the Eurozone. On the economic calendar, the latest employment reading is due for release at 11.30am. Whilst the macro concerns are the big drivers at the moment, traders will still watch the numbers closely. It is expected to show jobs creation of 10,200 and an unemployment rate of 4.9%; anything worse than this could see AUD weakness as traders factor in more rate cuts.

Market / Price at 8:00am AEST / Change Since Australian Market Close / Percentage Change
AUD/USD / 1.0180 / -0.0166 / -1.60%
ASX (cash) / 3991 / -150 / -3.6%
US DOW (cash) / 10773 / -432 / -3.86%
US S&P (cash) / 1127.0 / -46 / -3.92%
UK FTSE (cash) / 5010 / -234 / -4.46%
German DAX (cash) / 5642 / -366 / -6.09%
Japan 225 (cash) / 8830 / -192 / -2.13%
Rio Tinto Plc (London) / 34.16 / -2.04 / -5.64%
BHP Billiton Plc (London) / 18.66 / -1.09 / -5.52%
BHP Billiton Ltd. ADR (US) (AUD) / 36.93 / -0.66 / -1.76%
US Light Crude Oil (Sep) / 8209.00 / 45.00 / 0.55%
Gold (spot) / 1795.0 / 51.00 / 2.92%
Aluminium (London) / 2396.00 / -46 / -1.88%
Copper (London) / 8595.00 / -326 / -3.65%
Nickel (London) / 20970.00 / -830 / -3.81%
Zinc (London) / 2100.00 / -77 / -3.54%
RBA Cash Rate to be raised by 25bp (Sep) (%) / 5.00 / 0.00 / 0.00%

ENDS

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