IG Markets: Morning Thoughts
Risk assets had an interesting session with a definitively risk-off European trading day, which saw the euro move down
to a two-year low (1.2545) on reports that eurozone governments were asked to prepare individual contingency plans for
the possibility of a Grexit. This resulted in a sharp sell-off across the risk space before a recovery in the US
session. The Aussie dollar recovered from a six-month low of 0.96898 against the greenback in US trade, as some fairly
positive US economic data helped sentiment. There is plenty of event risk on the way and risk currencies are likely to
continue experiencing these wild swings. AUD/USD is facing near term resistance in the 0.97798-0.98 region. The
improvement in risk assets also saw a recovery of our opening call for the Aussie market from a low of 4029 to a high of
4083.
Ahead of the open, we are calling the ASX 200 up 0.2% at 4077 after US markets erased early losses to finish the session
higher. We expect to see the positive momentum into the close of US trade filter through to the local market at the
open. Investors will continue to monitor the wires for any comments out of the EU summit. As a result, we wouldn’t be
surprised to see a fairly choppy session, with volatility driven by headlines out of Europe. On the economic data front,
there is nothing to look out for locally. However, China’s HSBC flash manufacturing PMI number will be in focus. With
growth continuing to be an issue, it is highly likely this number will be under the microscope. The data really ramps up
later on with flash manufacturing and services PMI numbers due out in Europe.
On a stock level, we expect a strong start for BHP with its ADR pointing to a 1.2% gain to $32.33. Elsewhere in the
mining space, Aquarius Platinum is in for a tough day after suffering a big sell-off in Johannesburg due to a loss at
its Mimosa Mine. Sundance Resources will also be in focus after an update on its takeover with Hanlong aiming to
complete the deal in November. The deal values SDL at $0.57 per share and the stock closed at $0.40 yesterday. James
Hardie is likely to outperform yet again today, after new home sales data in the US exceeded expectations. The stock had
a good day yesterday after a positive home builders index reading and strong existing home sales data. As we said
yesterday, stocks with high US dollar/economy earnings exposure continue to outperform. Apart from JHX, some of the ones
to look out for are Resmed, CSL Limited and Newscorp. Myer and Graincorp have investor day presentations, and the stocks
will be of interest following this week’s earnings updates. GNC has had some positive broker reviews following its
earnings update, while MYR continues to attract negative press.
Market
Price at 6:30am AEST
Change Since Australian Market Close
Percentage Change
AUD/USD
0.9766
0.0003
0.04%
ASX (cash)
4077
10
0.24%
US DOW (cash)
12517
51
0.41%
US S (cash)
1319.3
8.0
0.61%
UK FTSE (cash)
5321
-16
-0.31%
German DAX (cash)
6359
21
0.33%
Japan 225 (cash)
8556.60
-11
-0.13%
Rio Tinto Plc (London)
27.93
-1.44
-4.89%
BHP Billiton Plc (London)
16.82
-0.76
-4.34%
BHP Billiton Ltd. ADR (US) (AUD)
32.33
0.40
1.24%
US Light Crude Oil (July)
90.45
-0.57
-0.63%
Gold (spot)
1561.1
3.9
0.25%
Aluminium (London)
2010
-15
-0.75%
Copper (London)
7556
-79
-1.03%
Nickel (London)
16776
-52
-0.31%
Zinc (London)
1933
-2
-0.10%
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.
ends