IG Markets - morning thoughts and opening prices

IG Markets - morning thoughts and opening prices

In US trade, markets edged higher as US dollar weakness supported key commodity prices and underpinned equity markets. There was also growing optimism that Greece will avoid a messy default. The optimism regarding the Greek drama was based on the belief that Greek political parties will agree to a bailout deal that was drafted earlier in the day following negotiations with the troika.

Among the major averages, the Dow Jones Industrial Average was up 0.3% to close at 12878. The S&P climbed 0.2% to finish at 1347 and the NASDAQ added two points to end at 2904. European equity markets were flat to slightly weaker.

The local market finished yesterday’s session on a sour note, as the RBA’s decision to keep interest rates on hold was not taken well by investors who were expecting a third consecutive rate cut. However, with risk assets (particularly in the commodities space) gaining ground overnight, we are likely to see an early bounce for Australian shares. BHP Billiton reported its first-half results this morning. At first glance it seems it slightly missed analysts’ underlying earnings forecasts. The interim dividend of 55 US cents also missed expectations of 57 US cents. Encouragingly, BHP beat consensus on iron ore (US$7.9 billion versus US$7.77 billion expected) and petroleum (US$3.9 billion versus US$3.2b anticipated). However, it slightly missed in the coal division, which is not a big surprise.

Ahead of the open, we are calling the Aussie market up 0.4% at 4292. However, having failed to successfully defend early gains this week, we might see the market drift through the session. The high Aussie dollar will continue to hinder the currency-sensitive stocks, while the retailers are back to the drawing board following yesterday’s rate decision. AUD/USD traded as high as 1.0823 following the surprise RBA decision, and was around 1.0790 late in the US session. Despite yesterday’s decision, most analysts continue to see a modest trimming of the cash rate over the coming months given the continued uncertainty around Greece, mixed domestic data and the high AUD.

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.

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