IG Markets - Morning thoughts and opening prices

Good morning,

In US trade, markets finished the quarter with a bang as both the Dow and S&P posted their best quarter since 1998. Sentiment on Friday was lifted by the eurozone finance ministers’ decision to raise their firewall to €700 billion. However, most of Friday’s events have been pushed aside by yesterday’s China PMI release, which smashed expectations. The sense of relief was magnified because many investors had been mentally prepared for a soft official print after the weak private sector flash PMI released over a week ago.

Among the major averages, the Dow Jones Industrial Average was up 0.5% at 13212. The S&P was 0.4% higher at 1408, whilst the NASDAQ shed 0.1% to finish at 3092.

The main release this weekend has been the official China PMI (March), which came in at 53.1 (the highest in almost a year). Whilst this is at odds with the unofficial HSBC PMI, which was released last week, it is likely to temporarily ease China growth concerns. We have already seen a positive reaction in risk currencies this morning, with AUD/USD jumping from a close of around 1.03445 on Saturday to 1.046. BHP’s ADR is pointing to a 0.2% gain at the open and we expect to see further upside to this figure given the China developments.

With risk appetite firmer, we expect to see the momentum filter through to equities today, particularly in the risk space. Ahead of the open, we are calling the Aussie market up 1% at 4380. This would see the local market trade at its highest level since October last year. The 4400 level is a key psychological resistance to look out for. Generally, when markets gap higher at the open, they tend to drift through the session ahead of some consolidation as the euphoria wanes. On the economic front today we have building approvals, AIG manufacturing index and MI inflation gauge data due out. Elsewhere in the region, China is closed Monday to Wednesday this week and Hong Kong has holidays Wednesday and Friday.

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.

Kind regards,
Stan Shamu
Market Strategist
IG Markets

www.igmarkets.com.au

ENDS

© Scoop Media