IG Markets - Morning thoughts and opening prices 2/3/12

In US trade, markets advanced despite oil futures topping $110 a barrel and some fairly mixed US economic data. The Institutional Swaps & Derivatives Association (ISDA) ruled that there has not been a credit event to trigger Greek credit default swap payouts. This also helped lift sentiment, with the S&P trading above the key 1370 level.

Among the major averages, the Dow Jones Industrial Average was up 0.2% at 12980. The S&P was 0.6% higher at 1374 and the NASDAQ surged 0.7% to finish at 2989.

The ISDA ruling was enough to push the banking sector higher and could also translate well for our local financial names. Commodity prices, except gold, were given a lift by the better-than-expected China PMI data, and investors shrugged off a weaker US manufacturing read, and as expected, PMI data out of Europe. Oil soared on reports of a blast destroying pipelines in Saudi Arabia. As a result, we are expecting to see a recovery in resource stocks after having traded heavy in yesterday’s session. BHP’s ADR is pointing to a 0.6% rise at the open. Unfortunately, the rise in oil prices will continue to temper the recovery in stocks.

Ahead of the open, we are calling the Aussie market up 0.6% at 4283. With risk assets rebounding overnight, we would not be surprised to see the market extend early gains. However, with reporting season over and no economic events on the calendar, we are a bit short of leads for today’s trading. As a result, we would not be surprised to see the market make an early attempt higher, only to drift through the day. Traders will also be waiting to see how the market reacts to the 4300 level which it has struggled to overcome this year.

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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