IG Markets - Morning thoughts and opening prices

IG Markets - Morning thoughts and opening prices

US markets bounced overnight on the back of some encouraging economic data. Sentiment was also lifted by an impressive Spanish bond auction, which saw it raise almost double its target. However, head of the IMF Christine Lagarde warned that Europe’s debt crisis is escalating to a point where it requires action by countries outside the European Union. These comments put a dampener on the rally and saw markets pare gains.

Among the major averages, the Dow Jones Industrial Average gained 0.4% to 11869. The S&P added 0.3% to 1216 and the NASDAQ was up 0.1% to 2541.

There was a lot of data released in the US overnight, with the highlight being a sharp drop in unemployment claims to a three-year low of 366,000. PPI numbers came in as expected, showing a 0.3% rise, while the current account deficit narrowed to 110 billion. The Empire State Manufacturing index climbed to a better-than-expected 9.5. The Philly Fed manufacturing activity rose to 10.3 in December from 3.6 in November, which also was much stronger than forecast.

Despite the positive news from the US, Europe remains the elephant in the room with no comprehensive solution in sight. Christine Lagarde’s comments reflect just how dire the situation is. Fitch downgraded six banks this morning as it continues to review global trading and universal banks.

In the risk space, sentiment was largely improved with the euro strengthening after printing an 11-month low against the greenback this week. Among the commodities, there were mixed performances during the session, with most of the major ones settling a touch lower. However, we might see some of the miners recover after the onslaught over the past few days. JB Hi-fi will be one to watch today after it issued a profit warning yesterday. This has also seen the stock downgraded to Neutral (from Outperform) by Credit Suisse this morning, with more downgrades potentially on the way.

Ahead of the open, we are calling the Aussie market up 0.4% at 4155. Locally, there is nothing to lookout for on the economic front.

Market

Price at 8:30am AEST

Change Since Australian Market Close

Percentage Change

AUD/USD

0.9919

-0.0103

-1.03%

ASX (cash)

4155

15

0.36%

US DOW (cash)

11883

-103

-0.86%

US S&P (cash)

1217.0

-12

-0.98%

UK FTSE (cash)

5404

-55

-1.01%

German DAX (cash)

5731

-8

-0.14%

Japan 225 (cash)

8388

-121

-1.42%

Rio Tinto Plc (London)

30.29

-0.06

-0.20%

BHP Billiton Plc (London)

18.36

0.00

0.00%

BHP Billiton Ltd. ADR (US) (AUD)

34.81

-0.25

-0.71%

US Light Crude Oil (Jan)

93.38

-2.23

-2.33%

Gold (spot)

1571.0

-2

-0.13%

Aluminium (London)

1975.00

12

0.61%

Copper (London)

7211.00

1

0.01%

Nickel (London)

17895.00

495

2.84%

Zinc (London)

1846.00

1

0.05%

RBA Cash Rate to be decreased by 25bp (Feb) (%)

53.00

2

2.00%

ends

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