IG Markets - Morning Prices March 15

In US trade, markets were relatively flat after the previous day’s big gains. Investors’ focus shifted to China growth concerns, after Premier Wen made some fairly negative comments about the property market. This sent commodities lower and encouraged USD buying. Gold was the biggest loser, dropping over 2% on fading QE III expectations and a stronger USD.

Among the major averages, the Dow Jones Industrial Average was up 0.1% at 13194. The S&P was down two points at 1394 and the NASDAQ added a point to finish at 3041.

Commodities declined after Chinese Premier Wen said that property prices remained far from reasonable levels. This is likely to see recent government curbs on property speculation stay in place. Copper is a major beneficiary of Chinese property development and fears over demand sent it nearly 2% lower. The US dollar also continued to trend higher, which hurt commodities even further. As a result, we expect to see resource stocks come off this morning. BHP’s ADR is pointing to a 1.4% drop at the open, and similar falls are likely to extend to the other major resource companies.

Ahead of the open, we are calling the Aussie market down about half a per cent at 4263. Yesterday, the market printed a high of 4294.9 as it continues to struggle in the 4295-4310 zone. This level will remain in focus, should the market manage to recover from the opening call. On a more positive note, currency-sensitive stocks with high USD exposure are likely to get a lift from the stronger USD and weaker AUD. Some of the stocks to watch are CSL Limited, James Hardie, Resmed and Billabong. On the economic front, today we have MI inflation expectations and new motor vehicle sales data due out. Elsewhere in the region, Japan’s Nikkei is likely to outperform yet again after USD/JPY rallied to 83.83 overnight.

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