IG Markets - Morning thoughts and opening prices

Good morning,

In US trade, markets were mostly higher on yet another positive round of corporate earnings. European markets were lifted by stronger-than-expected UK retail sales and a better-than-anticipated German IFO survey.

Among the major averages, the Dow Jones Industrial Average was up 0.5% at 13029. The S&P was 0.1% higher at 1379, while the NASDAQ shed 0.2% to finish at 3000.

Optimism on Europe and a broad fall in the US dollar saw commodity prices edge higher. Despite the gains seen in the commodity space, we are likely to see some caution ahead of today’s China PMI numbers. These numbers tend to have a significant bearing on how commodities and related stocks trade. BHP’s ADR is pointing to a 0.4% fall at the open to $35.37. The mining giant’s price action is currently testing a downtrend resistance line from April last year’s highs. As a result, we might see some key levels tested yet again today. Gold stocks are likely to underperform as the precious metal continues to struggle due to a drop in physical demand from China.

Ahead of the open, we are calling the Aussie market up a couple of points at 4368. We expect a slightly negative bias to this call after risk assets retreated slightly this morning. It is a huge week for event risk, with plenty of significant economic releases due out. On the local economic front, we have PPI data due out today. We also have the release of HSBC’s China flash manufacturing PMI number. This is normally a pretty significant event risk, particularly at a time when China growth concerns continue to be a hot topic. The previous reading was 48.3 and any major moves north of this figure could result in some big moves in the Aussie dollar. Tomorrow we have the much anticipated CPI data due out. The RBA has already flagged the CPI as the key ingredient for a May rate cut, which is now widely expected. As a result, the data will have a pretty strong bearing on how local equities and the Aussie dollar trade this week.

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

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