IG Markets - Morning thoughts and opening prices

Good morning,

In US trade, markets extended gains on the back of some stronger-than-expected data and well received corporate earnings. Pending home sales comprehensively beat consensus, as the improving jobs environment continues to lift the housing market. We have seen sentiment take a hit post US trade, as S&P cut Spain’s rating by 2 notches to BBB+ from A. This isn’t totally unexpected given it was put on outlook negative on January 13.

Among the major averages, the Dow Jones Industrial Average was up 0.9% at 13205. The S&P was 0.7% higher at 1400, while the NASDAQ climbed 0.7% to finish at 3051.
Key commodities gained, aided by a weaker US dollar and signs that the US housing sector is finally recovering. Copper surged 2%, gold climbed 0.8% and oil added 0.4%. BHP’s ADR is pointing to a 0.9% gain at the open to $35.41. Macquarie Group will be the main stock to watch today after releasing its FY12 results. FY12 earnings of $730 million (-24%) are slightly ahead of guidance ($717 million). MQG also flagged a buyback of up to $500 million. We wrote a small preview of the results in yesterday afternoon’s report. JB Hi-fi will also be one to watch after releasing an earnings update. The stock was hammered in December after a significant earnings downgrade and seems to have disappointed yet again. Commonwealth Bank has been upgraded, while CSL Limited has been downgraded by Deutsche Bank.

Ahead of the open, we are calling the Aussie market up 0.6% at 4404. We expect to see slight downside bias to this call on the back of Spain’s downgrade. Yesterday’s high of 4393.8 will be the key level to look out for today as it is the significant near-term resistance. Should we manage to break through this level, the October 28 high of 4417 will be the next to keep an eye on. Elsewhere in the region, it is a big day of economic data in Japan. The BoJ meeting will be the highlight, with the market thoroughly anticipating an increase of ¥5 trillion to its asset-purchase programme. With expectations high, a failure to act would see traders pouring back into the JPY, resulting in USD/JPY weakness.

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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