IG Markets: Morning Report for 13/01/2012

Good morning

Overnight, US markets edged higher in thin trade on the back of two successful European debt auctions, though despite some disappointing US economic data.

Among the major averages, the Dow Jones Industrial Average added 0.2% to close at 12471, the S&P rose 0.2% to 1295, while the NASDAQ added 0.5% to finish 2724. Among the major S&P sectors, materials, industrial and financial names were again the best performers, while energy slipped on the session.

It was a big session in Europe overnight. With the BoE and the ECB leaving rates unchanged, as was widely anticipated, most investor attention was focused on Spanish and Italian debt auctions. Spain’s auction was met with strong demand at resulting yields lower than the same maturities late last year, while the Italian auction also saw yields on one year maturities falling to their lowest levels since June 2011. Obviously investors welcomed these developments, and European indices enjoyed a relatively solid session.

The positivity created by these successful auctions was somewhat offset by some weaker-than-expected US economic data. Weekly jobless claims gained by a greater-than-expected 24,000 to a seasonally adjusted 399,000, while retails sales rose by a disappointing 0.1% in December versus a forecast of 0.3%, their slowest pace in seven months. This data came as a bit of surprise as, recent months have been characterised by US data beating expectations. Essentially we’re looking at a case of two steps forward, one step back.

Turning to the local market, the ASX 200 is set to open firmer today, with the benchmark index called to unwind 23 points or 0.6% higher at 4205. Based on US leads, we can once again expect to see materials, industrials and financial names pacing gains. What will be of interest today is how investors view the 4200 level. So far this year we have managed to get to 4202 on a few occasions, but have been unable to sustain this level with there definitely being some degree of resistance around the 4200 mark. Overnight we saw the S&P 500 close marginally above its most recent high of 1292, so there is a definite feeling that markets want to move north. Overnight we saw modest USD weakness lead to another strong night for the base metals complex, which should once again support our major miners. BHP’s ADR is suggesting the local stock will open 56 cents or 1.5% higher at $36.93. It would be nice to see the local market end the week with a convincing close above 4200.

Market Price at 8:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0340 0.0044 0.43%
ASX (cash) 4204 23 0.55%
US DOW (cash) 12471 36 0.29%
US S&P (cash) 1296.0 8 0.62%
UK FTSE (cash) 5688 8 0.14%
German DAX (cash) 6224 48 0.78%
Japan 225 (cash) 8415 30 0.36%
Rio Tinto Plc (London) 35.48 0.59 1.69%
BHP Billiton Plc (London) 20.55 0.24 1.18%
BHP Billiton Ltd. ADR (US) (AUD) 36.94 0.57 1.57%
US Light Crude Oil (Feb) 99.08 -2.19 -2.16%
Gold (spot) 1650.0 8 0.49%
Aluminium (London) 2163.00 -2 -0.09%
Copper (London) 8005.00 225 2.89%
Nickel (London) 19670.00 220 1.13%
Zinc (London) 1967.00 31 1.60%
RBA Cash Rate to be decreased by 25bp (Feb) (%) 72.00 0 0.00%

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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