Morning thoughts and opening prices 21/3/12

In US trade, markets declined on renewed China growth concerns. This saw US markets come off four-year highs, as risk appetite slumped. Attention has now well and truly swung back from Europe to Asia and China in particular. Whether or not China can successfully engineer a soft landing has been a dominant theme for a while now, and this might just be a slight overreaction by markets which were beginning to look ‘toppish’ Investors might just be using this as an opportunity to take some profits off the table after the recent run.

Among the major averages, the Dow Jones Industrial Average was down 0.5% at 13170. The S&P was 0.3% lower at 1406 and the NASDAQ shed 0.1% to finish at 3074. European markets had an even tougher session with the FTSE, CAC and DAX all slumping over 1% each

AUD/USD was the biggest victim of the China growth fears as the pair slid immediately after the BHP Billiton comments. The pair traded as low as 1.04570, after having traded at around 1.062 early in the Asian session. Following a broad sell-off in the commodities space, resource stocks are in for a tough start to the session. BHP’s ADR is pointing to a 1.4% drop at the open to around $34.82.

Ahead of the open, we are calling the Aussie market down 0.5% at 4253. Some of the currency sensitive stocks might get some relief from a weaker Aussie dollar. David Jones reported its first-half results this morning and at first glance it looks roughly in line with consensus. The future of its financial services business will be key, as investors look for an indication of what will happen with the Amex alliance. Investors will be hoping DJS does not lose too much money from changes to the alliance past 2014. On the economic front, we have MI leading index data which is not a big market event.

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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