IG Markets - Morning Prices Dec 2

US markets were modestly weaker overnight, as markets took a breather after this week’s strong move higher. With markets having put on significant gains over the past seven days, it is not surprising to see them consolidate. Investors also seem to be exercising some caution ahead of tonight’s US monthly jobs report. Unemployment claims came in worse than expected, but the US manufacturing PMI number came in at 52.7, beating expectations. November manufacturing expanded at the fastest pace in five months.

Among the major averages, the Dow Jones Industrial Average shed 0.2% to end at 12020. The S&P retreated 0.2% to 1245, while the NASDAQ added 0.2% to close at 2626. Financial stocks had a tough session after Massachusetts’ attorney general sued some of the big banks including Bank of America, JP Morgan and Citi, alleging deceptive foreclosure practices.

On the European front, German Chancellor Angela Merkel is reported to have rejected calls for an expanded ECB role in solving the debt crisis. Instead, she will continue to push for tighter economic ties in Europe. The reports came after ECB President had signalled that the Central Bank could do more to fight the crisis in return for fiscal union in a speech. It was a mixed night for Europe’s bond auctions, as Spain’s bond yields rose, but French yields fell.

Following the relatively mixed leads from US markets, we are calling the Aussie market down three points at 4225. Without a firm lead from US markets, we are likely to see a fairly subdued session. This could lead to some profit taking later in the session ahead of tonight’s trade, with the Aussie market already up 6.1% so far this week. Resource stocks will come under pressure after some weakness in commodity markets overnight, particularly base metals. Australia’s big banks might also come under pressure after their credit ratings were cut by S&P to AA-. Locally, there is no major economic data due out today.

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