IG Markets - Morning thoughts and opening prices

Good morning,

In US trade, markets declined yet again on heightened Spain bank concerns and some disappointing US economic data. The surprise deterioration in the Philadelphia Fed manufacturing index and unchanged jobless claims numbers fuelled investor concerns about the US economic recovery. Talk of a run on Spanish banks intensified, while Spanish yields rose to as high as 6.42%.

Among the major averages, the Dow Jones Industrial Average was down 1.2% at 12442. The S&P was 1.5% lower at 1305, while the NASDAQ retreated 2.1% to close at 2814.

In the commodities space, gold was the highlight, as the precious metal rallied over 2% from the recent lows. Speculation of further Fed easing seems to be increasing following the disappointing US economic data and yesterday’s FOMC meeting minutes. The US dollar would lose its appeal in the event of further QE, leaving investors flocking to gold for safety. As a result, we could see the gold miners outperform today after the recent sell-off. However, the rest of the resource space is set for a tough start to the session, with BHP’s ADR pointing to a 1.9% fall to $32.13. The banking space will be in focus today following the developments in Spain. The local banks held up fairly well in the face of a risk sell-off and we could see selling accelerate as the banks play catch up.

Ahead of the open, we are calling the Aussie market down 1.9% at 4078. This leaves the local market trading at its lowest level since January, effectively erasing all of 2012’s gains. We are likely to continue seeing some traders trying to pick a bottom for this market, which is high risk considering the slide we have seen this week with numerous support levels broken. On the economic front, there is nothing to look out for today. However, there is a slight positive from Greece to consider at the moment. Latest polls suggest the New Democracy party could secure 123 seats, which combined with the PASOK's 41, would produce a comfortable majority. This knocks some of the wind out of Syriza’s sails.

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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