IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

The FOMC decided to extend its Operation Twist programme by $267 billion through the end of 2012. This essentially buys the Fed some time as the European situation continues to unfold. Investors were disappointed that Fed chief ben Bernanke did not signal that QE III was on the way. Sentiment also dampened after the Fed cut estimates for economic growth on the back of a slowing jobs and tough credit markets. Risk currencies were fairly resilient, but the sterling underperformed following a dovish set of BoE minutes from the June meeting. The Aussie dollar shrugged off the fall in commodity prices to finish moderately higher, with AUD/USD printing a high of 1.02245.

Ahead of the open, we are calling the Aussie market up 0.2% at 4141. We get the sense that it will be fairly range-bound today on the back of the mixed leads from the European and US sessions and ahead of China’s HSBC Flash manufacturing PMI. China PMI numbers are always capable of being a big market moving event, particularly when growth concerns remain a major issue. Elsewhere in the region, a big move higher in USD/JPY following the FOMC meeting is likely to support Japan’s Nikkei today. The Nikkei generally benefits from a weaker yen.

On a stock level, we expect a strong start for BHP Billiton, with its ADR pointing to a 0.4% rise to $32.74. Oil was one of the biggest stories of the night, tumbling over 3% to an eight-month low after inventories jumped to a 22-year high. As a result, the energy space will likely come under pressure today and may underperform. Gold also slumped following the FOMC meeting and therefore gold stocks will be in focus today. The precious metal had been supported by optimism of further quantitative easing and therefore investors suffered as this didn’t come to fruition. The obvious ones to watch are Newcrest Mining, Medusa Mining, Kingsgate and resolute Mining. Investors will also continue to follow the media space closely after Newscorp’s bid for Consolidated Media.

Market

Price at 6:30am AEST

Change Since Australian Market Close

Percentage Change

AUD/USD

1.0186

-0.0002

-0.01%

ASX (cash)

4141

9

0.21%

US DOW (cash)

12820

23

0.18%

US S&P (cash)

1354.4

1.9

0.14%

UK FTSE (cash)

5629

50

0.90%

German DAX (cash)

6393

45

0.71%

Japan 225 (cash)

8805

53

0.60%

Rio Tinto Plc (London)

30.95

0.43

1.43%

BHP Billiton Plc (London)

18.75

0.11

0.59%

BHP Billiton Ltd. ADR (US) (AUD)

32.74

0.14

0.44%

US Light Crude Oil (August)

81.10

-3.27

-3.87%

Gold (spot)

1607.0

-13.9

-0.86%

Aluminium (London)

1901.375

-24

-1.26%

Copper (London)

7503.125

-75

-0.99%

Nickel (London)

17109.5

75

0.44%

Zinc (London)

1876

-35

-1.83%

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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