IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Risk sentiment slumped through US trade, as the euphoria from the Greek election results waned quite swiftly. Focus is now back on debt concerns as Spanish and Italian yields remain at elevated levels. Spanish 10-year yields traded above 7.15%, a euro-era record, as investors look ahead to Thursday's auction, the first since Spain requested external assistance to help recapitalise its banking sector. Leaders at the G20 meeting are now under pressure to come up with a plan to curb the crisis. The euro pared its gains made in Asia, as the fixed income markets in Europe came back under heavy pressure. However, the Aussie dollar was surprisingly resilient, as AUD/USD raced to a high of 1.01423 and is currently consolidating near there ahead of the RBA minutes.

Ahead of the open, we are calling the Aussie market down 0.5% at 4117. This would see the market test support from the previous resistance level that it broke through yesterday As a result, we could see some buyers at that level early. Some investors would have been encouraged by yesterday’s move and will feel it is the time to come off the sidelines. Attempts to form a coalition government in Greece will get underway today, and this is a key event going into this session. Investors are also likely to keep an eye on the G20 meeting. On the local economic front, we have the RBA’s monetary policy meeting minutes due out at 11.30am. This could be a source of volatility for the Aussie dollar

On a stock level, we expect a slightly weaker start for BHP Billiton, with its ADR pointing to a 0.2% fall to $32.56. Peer Rio Tinto’s uranium mine output at Rossing dropped 41% to 2148 metric tonnes in 2011 amid low grades and crushing-plant availability. Gold stocks will be one to watch this week ahead of Thursday’s FOMC meeting. This is a key event for the precious metal. There are also some reports suggesting Nathan Tinkler may borrow around $2.5 billion to finance a takeover bid for Whitehaven Coal. Fairfax will be one to watch yet again on reports that Gina Rinehart will be offered board representation. The stock enjoyed a big move higher yesterday after announcing a restructure.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0122 0.0008 0.07%
ASX (cash) 4117 -20 -0.49%
US DOW (cash) 12739 -69 -0.53%
US S&P (cash) 1344.8 -3.0 -0.22%
UK FTSE (cash) 5506 -53 -0.95%
German DAX (cash) 6255 -69 -1.09%
Japan 225 (cash) 8680 -41 -0.47%
Rio Tinto Plc (London) 29.62 0.27 0.92%
BHP Billiton Plc (London) 18.30 0.30 1.65%
BHP Billiton Ltd. ADR (US) (AUD) 32.56 -0.08 -0.24%
US Light Crude Oil (July) 83.48 -1.41 -1.66%
Gold (spot) 1627.7 5.3 0.32%
Aluminium (London) 1929 -4 -0.21%
Copper (London) 7510 0 0.00%
Nickel (London) 16650 -200 -1.19%
Zinc (London) 1880 -24 -1.26%

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.

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