IG Markets - Morning thoughts and opening prices

Good morning,

In US trade, markets edged higher with equities mainly supported by a weaker US dollar. Initial weakness had been triggered by lukewarm new home sales data, but falling yields pushed the USD lower and lifted equities. However, there is still scepticism about Spain after Italy’s Prime Minister Mario Monti warned that the country could reignite the European debt crisis, as euro-area ministers this week prepare a deal to bolster the region’s financial firewall.

Among the major averages, the Dow Jones Industrial Average was up 0.3% at 13081. The S&P was 0.3% higher at 1397 and the NASDAQ added 0.2% to finish at 3068. This was the Dow and S&P’s worst week of the year.

With a weaker US dollar, commodities held up fairly well on Friday, which should be supportive of our local resource names. However, BHP’s ADR is pointing to a 0.6% fall at the open. This makes the leads fairly confusing, considering the mild improvement in risk appetite. AUD/USD finally bounced higher after having had a tough week on growth fears. Investors this week will be looking for any signs of what the RBA might do with interest rates next week, despite a fairly thin weekly economic calendar.

Ahead of the open, we are calling the Aussie market down 0.1% at 4267. Locally, there is nothing on the economic front to look out for. Qantas is likely to be in focus after announcing a deal with China Eastern to start Jetstar Hong Kong in 2013. Focus this week will likely be on the reinforcement of Europe’s firewalls after Germany finally eased its stance on the firewall issue. We are also likely to see some quarter-end rebalancing and window dressing possibly driving risk assets higher, although volume is expected to continue to be light.

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.

ENDS

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