IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Overnight, European equities continued to edge higher, carrying on the momentum established after last week’s EU summit. US markets were flat to slightly higher, with earlier gains tempered by a weaker-than-expected ISM manufacturing report.

Not surprisingly, the soft manufacturing report fuelled expectations that the Fed would soon be forced to act with additional quantitative easing, a call that will only intensify should we get a weak non-farm payrolls report this Friday. Adding to the intrigue around all of this week’s economic data (numerous central bank decisions and the US non-farms), is the fact US markets will effectively be on holidays over the back end of the week, celebrating Independence Day.

For the local market, today looks like it will be all about consolidation of the last two sessions’ gains, plus the RBA decision. Having started rallying on Friday afternoon after certain initiatives were announced at the EU summit, the local market has a bit of momentum behind it. That said, investors are very aware that momentum can turn on a dime and hence caution is still very much evident. Focus today will lie with the RBA decision this afternoon It is almost a near certainty that the RBA, having cut by 75 basis points over its last two meetings, will pause for breath today, giving itself time to reassess both the global and domestic landscapes. While it is probable that rates will fall again at some stage later this year, attention will fall to the accompanying statement and any new clues to the RBA’s thinking on the state of the economy and the timing of future cuts.

Once again, the performance of the materials and energy sectors will be of interest today, particularly given we saw a stronger USD and weaker base metals prices overnight. Over the last two sessions it has been a weaker dollar and firmer metals prices that have seen some money flow back into beaten-up material and energy names, so it will be interesting to see how fickle and fleeting investor sentiment is towards these two growth-orientated sectors. This will tell a bit of a story.

IG Markets is calling the ASX 200 up 9 points or 0.2% at 4142.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0254 0.0028 0.27%
ASX (cash) 4142 9 0.22%
US DOW (cash) 12844 -2 -0.02%
US S&P (cash) 1361.9 4.6 0.34%
UK FTSE (cash) 5650 76 1.36%
German DAX (cash) 6507 93 1.44%
Japan 225 (cash) 9025 22 0.24%
Rio Tinto Plc (London) 30.61 0.42 1.39%
BHP Billiton Plc (London) 18.28 0.22 1.22%
BHP Billiton Ltd. ADR (US) (AUD) 31.96 0.24 0.75%
US Light Crude Oil (August) 83.64 -0.24 -0.29%
Gold (spot) 1597.4 5.3 0.34%
Aluminium (London) 1909 -2 -0.10%
Copper (London) 7633 -52 -0.68%
Nickel (London) 16744 -46 -0.27%
Zinc (London) 1873.125 -4 -0.21%

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