IG Markets - Morning thoughts and opening prices

Good morning,

In US trade, markets were mostly weaker, as global growth concerns intensified following very weak manufacturing PMI data out of the eurozone and worse-than-expected US ADP employment data. The euro sold off after the worrisome data prints as they pointed to weaker economic activity not just in the periphery but also in Germany.

Among the major averages, the Dow Jones Industrial Average was down 0.1% at 13269. The S&P was 0.3% lower at 1402, while the NASDAQ added 0.3% to finish at 3060.

Focus today will be on Westpac’s half-year results which were released this morning. At first glance, the bank seems to have beat consensus, with cash earnings rising 2% to $3.195 billion. Most analysts were expecting flat cash earnings of around $3.186 billion. The 82 cents per share dividend was largely expected, representing a payout ratio of around 80%. CEO Gail Kelly’s comments were pretty cautious as expected. Commonwealth Bank has slashed its variable interest rate by 40 basis points following the RBA’s rate cut on Tuesday. This is more than what most market participants were expecting. Following its results from yesterday, ANZ Bank has been cut to Sell (from Neutral) by UBS. This could result in further downside in the stock today.

Ahead of the open, we are calling the Aussie market relatively flat at 4436. BHP’s ADR is pointing to a 0.1% gain to $36.29. Following the deepening global growth concerns, it is difficult to see where the upside could come from in today’s session, particularly in the resource space. There is not much on the local economic calendar today, but we do have non-manufacturing PMI numbers out of China to look out for. The Aussie dollar was relatively flat, with AUD/USD momentarily dipping below 1.03 before staging a minor recovery. The scale of the RBA's move has raised fears that the inflation and growth forecasts could be revised down quite sharply, potentially opening the door for further cuts. As a result, we are likely to see AUD/USD price action remain quite subdued.

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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