IG Markets - Morning Prices Nov 28

Global markets were mixed on Friday night with Europe gaining ground, though the US modestly weaker. European stocks broke their losing streak despite lingering concerns about the debt crisis. Although US markets lost ground, there have been several positive developments which will encourage investors this morning.

Among the major averages, the Dow Jones Industrial Average lost 0.2% to end at 11232. The S&P dropped 0.3% to 1159 and the NASDAQ was down 0.8% to close at 2442. US retail sales over the Thanksgiving weekend are reported to have soared 16% to a record $52.4 billion.

There were plenty of developments over the weekend with reports that French and German leaders are working on a new "Stability Pact" that may be announced as quickly as this week. The EFSF may also be planning to insure bonds of troubled countries. Guarantees of between 20% and 30%, and the setting up private funds with investors are among the solutions to be considered by finance ministers this week. Investors will be looking ahead to a meeting for euro-area finance ministers on November 29, as they continue to try and rescue the region from the debt crisis.

In another positive move, the IMF is reportedly preparing a EUR 600 billion loan for Italy. This would give Italy’s Prime Minister Mario Monti 12 to 18 months to implement his reforms without having to refinance the country’s existing debt. We also saw some action in Belgium, with political parties reaching a budget deal, which will clear the path for government formation.

Based on Saturday morning’s close for the futures, we are calling the Aussie market to open up 0.4% at 3999. However, risk currencies have charged higher this morning, indicating that we could see similar moves in the equity markets. AUD/USD has jumped above 98 upon reopening this morning in response to the developments. Locally, there is no major economic news, but traders will be eyeing stocks like BHP Billiton, which tested key support on Friday and may start to recover from those levels. Woodside Petroleum will also be in focus after Friday’s sharp sell-off, plus being downgraded by UBS to neutral (from buy) this morning. Some traders will be looking for a pairs trade involving selling WPL and buying another energy play like Oil Search.

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