IG Market - Morning Thoughts

IG Market - Morning Thoughts

Risk assets rallied in US trade after the latest round of economic data fuelled talk of Fed easing even further. A bigger-than-expected result for unemployment claims and a benign inflation reading saw investors speculate the Fed might conduct some easing to spur growth. Plummeting energy prices helped drive headline US CPI inflation below the Fed's 2.0% target in May, for the first time in 16 months. The main story in the European session was a rally in Greek markets on speculation the pro-bailout party might win the elections. The Aussie dollar rallied along with other risk currencies, with AUD/USD bursting through parity to print a high of 1.00335. This level is around the 50% retracement of the drop from the end of April high to the June low, and therefore deserves some attention.

Ahead of the open, we are calling the Aussie market up 0.5% at 4062. The market has failed to maintain any momentum this week, and as a result has remained range bound. Going into the end of the week, we feel the overnight leads will be of little significance, and investors are likely to focus more on the upcoming events and position themselves accordingly. Elevated Spanish yields may also warrant some caution. We will be seeing some positioning today ahead of the Greek elections which have the potential to be a major turning point for markets. Locally, there is nothing on the economic calendar today. Elsewhere in the region, there is plenty on the economic calendar in Japan, with the monetary policy statement, overnight call rate and a BoJ press conference set to hit the wires.

On a stock level, we expect a weak start for BHP Billiton, with its ADR pointing to a 0.4% fall to $31.67. BofA Merrill Lynch feels BHP’s aluminium assets may face write-downs of $2 billion. However, the stock could get a lift from surging natural gas prices. Whitehaven will be one to watch, after the AFR reported Nathan Tinkler has got some backing and the WHC board is likely to accept a $6 per share offer. A fairly strong session for oil and gold could give a lift to related stocks. Fairfax will remain in focus on reports that Gina Rinehart may have boosted her stake in the company.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0034 0.0082 0.82%
ASX (cash) 4062 19 0.48%
US DOW (cash) 12655 131 1.04%
US S&P (cash) 1329.3 11.5 0.87%
UK FTSE (cash) 5477 4 0.08%
German DAX (cash) 6153 -5 -0.07%
Japan 225 (cash) 8588 19 0.22%
Rio Tinto Plc (London) 28.65 -0.05 -0.17%
BHP Billiton Plc (London) 17.76 -0.14 -0.78%
BHP Billiton Ltd. ADR (US) (AUD) 31.67 -0.13 -0.41%
US Light Crude Oil (July) 84.29 1.42 1.71%
Gold (spot) 1625.9 5.2 0.32%
Aluminium (London) 1954 -16 -0.80%
Copper (London) 7426 17 0.23%
Nickel (London) 16736 -329 -1.93%
Zinc (London) 1918 13 0.67%

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.

www.igmarkets.com.au

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