IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Overnight, European and US markets were again weaker on continuing disappointment that the Fed seems unwilling to provide more stimulus to the US economy, plus escalating concerns that today’s Chinese GDP print may be weaker than expected.

Global sentiment is currently in the doldrums. It appears that investors are waiting for resolutions and clarity on a large number of factors that influence their investment decisions. The ongoing European crisis and its many facets, the sluggishness of the US economy and how the Fed might assist, the uncertainty over the US Presidential elections, the creeping up of the ‘fiscal cliff’ and the magnitude and impact of a Chinese slowdown are just a few of the issues weighing on the market and keeping investors on the sideline or in bonds, which are now yielding at record lows.

Having been hard hit by Chinese GDP fears yesterday, the local market is set for a slightly firmer open today, with the ASX 200 called to unwind 7 points or 0.15% higher at 4075. That said, there is little conviction in this call as investor and trader sentiment is so skittish at the moment with any action being unlikely until after the Chinese GDP release around midday. While expectations are for a print in the 7.7% to 7.9% range, there have been bearish rumours circulating about a sub-7% print, which clearly rocked the likes of BHP, Rio Tinto and Fortescue Metals yesterday. Only once the number is released will we be able to make the call whether yesterday’s selling was justified or an overreaction. Also, perhaps more important than the number itself (which is a backwards looking indicator) will be the response of Chinese policy makers. We have already had 2 rate cuts in the last month which will still be working their way through the system, but there could also be more on the cards. For that we will have to wait and see.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0137 -0.0032 -0.32%
ASX (cash) 4075 7 0.16%
US DOW (cash) 12567 16 0.12%
US S&P (cash) 1333.2 -1.4 -0.10%
UK FTSE (cash) 5625 -9 -0.15%
German DAX (cash) 6442 18 0.27%
Japan 225 (cash) 8710 -10 -0.11%
Rio Tinto Plc (London) 29.27 -1.06 -3.49%
BHP Billiton Plc (London) 17.51 -0.60 -3.30%
BHP Billiton Ltd. ADR (US) (AUD) 30.50 0.10 0.34%
US Light Crude Oil (August) 85.78 0.26 0.30%
Gold (spot) 1572.4 2.9 0.18%
Aluminium (London) 1885 -13 -0.69%
Copper (London) 7550.625 8 0.11%
Nickel (London) 15884 -264 -1.63%
Zinc (London) 1858.875 -5 -0.26%

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.

www.igmarkets.com.au

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