IG Markets - Morning thoughts and opening prices 21/12/11

US markets soared overnight after yet another round of positive economic data. Building permits and housing starts data topped expectations as builders started work on the most houses in over a year. Sentiment was also lifted by improving German confidence and a positive Spanish bond auction.

Among the major averages the Dow Jones Industrial Average surged 2.9% to close at 12104. The S&P climbed 3% to 1241 and the NASDAQ rose 3.2% to 2604.

There is growing optimism surrounding the Long-Term Refinancing Operations (LTROs) in Europe, with some reports suggesting a huge take-up is expected. The banks were urged to take up the funds as part of concerted efforts to ease severe strains across the eurozone’s financial system. Spain’s debt auction went extremely well, with short-term debt sold at a far lower yield than in previous months, and yields on its 10-year bonds also pulled back to just over 5%. Fresh rumours of China easing before year-end also helped to lift sentiment

Risk assets rallied with some big gains in commodities and risk currencies. Oil jumped around 4% and the metals were also higher. The US dollar index dropped below 80 as risk currencies like the euro and Aussie dollar strengthened against the greenback. After the recent sell-off in the resource space, we are likely to see strong gains in materials and energy.

With markets in a risk-on mood, we are calling the ASX 200 to open up 2% at 4136. Locally, there isn’t much to lookout for on the economic front.

IG Markets provides round-the-clock CFD trading on currencies, indices and commodities. The levels quoted in this email are the latest tradeable price for each market. The net change for each market is referenced from the corresponding tradeable level at yesterday’s close of the ASX. These levels are specifically tailored for the Australian trader and take into account the 24hr nature of global markets.

Please contact IG Markets if you require market commentary or the latest dealing price.

ENDS

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