IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Risk assets rallied with major European and US bourses posting gains of over 2% on hopes of a Spain bailout and easing measures by central banks around the world. Some traders simply attributed the move to short covering, as nothing concrete was actually announced. Hopes for strong Fed action were lifted by comments from the Fed's Lockhart who said it might need to consider more easing if the US economy falters. Reports indicating that European officials are pondering a bailout programme for Spain that would focus on the banks and only impose "very limited conditionality" without any heavy-handed austerity measures saw the euro and other risk currencies rally. The Aussie dollar continued its run from the Asian session and AUD/USD went on to print a high of 0.99327. The pair now has parity in its sights, and that is the next key resistance to look out for.

Ahead of the open, we are calling the Aussie market up 1.4% at 4112. A couple of attempts at a recovery in May stalled at around 4115-4120, and therefore we could see some resistance in this region. Should the market manage to charge through this resistance, 4150 is the next key level the bulls need to overcome. Today is another big day for the Aussie dollar, with jobs numbers on the calendar. The unemployment rate is expected to rise to 5.1% (from 4.9%), with 2200 jobs lost. There is always a significant variation on the jobs added/lost front among analysts, and in most cases the actual reading ends up being something completely different. Many continue to feel recent jobs figures did not quite reflect the real situation in the jobs market. A strong reading on the jobs front could ignite yet another Aussie dollar rally.

On a stock level, we expect a strong start for BHP Billiton, with its ADR pointing to a 2.5% rise to $31.86. Risk assets are in for a firm start with gains expected across the cyclical space. Woodside Petroleum has been raised to overweight (from neutral) by JP Morgan. After a sharp sell-off this week, we could finally see Qantas shares attract some buying today. Fairfax will be one to watch on the back of reports, suggesting it may write down the value of its mastheads further. Brambles will resume trading today after halting shares for a $448 million pro-rata entitlement offer. The defensives are likely to underperform, particularly the healthcare space, which has had a good run over the past weeks.

Market

Price at 6:30am AEST

Change Since Australian Market Close

Percentage Change

AUD/USD

0.9922

0.0095

0.97%

ASX (cash)

4112

57

1.41%

US DOW (cash)

12472

248

2.03%

US S&P (cash)

1319.7

24.6

1.90%

UK FTSE (cash)

5412

120

2.26%

German DAX (cash)

6131

109

1.81%

Japan 225 (cash)

8660

126

1.48%

Rio Tinto Plc (London)

29.00

1.28

4.63%

BHP Billiton Plc (London)

17.76

0.81

4.79%

BHP Billiton Ltd. ADR (US) (AUD)

31.86

0.76

2.46%

US Light Crude Oil (July)

85.45

0.77

0.91%

Gold (spot)

1619.4

-4.6

-0.29%

Aluminium (London)

1983

-3

-0.13%

Copper (London)

7463

98

1.33%

Nickel (London)

16170

146

0.91%

Zinc (London)

1922

8

0.41%

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.

www.igmarkets.com.au

ends

© Scoop Media