IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Risk assets continued to struggle as investors grow increasingly pessimistic over the ability of Europe to solve its crisis. As a result, the euro and other risk currencies struggled, with EUR/USD testing sub-1.21 levels in the face of a further jump in peripheral bond yields. Concerns that more regions beyond Valencia may have to seek financial aid from the central government in Spain have reinforced the risk that Spain may have to request a full EU/IMF bailout. With Troika set to descend on Greece, there is also significant risk that we will see an undesirable outcome on that front. The Aussie dollar slid, along with other risk currencies with AUD/USD printing a low of 1.02433. We have seen risk assets take a leg lower this morning after Moody’s lowered its outlook on Germany, Netherlands and Luxembourg to negative.

Ahead of the open, we are calling the Aussie market down 0.6% at 4103. We were initially expecting a mildly weaker start for the market, but this has since changed following Moody’s news. There is a raft of data to look out for on the economic calendar today with plenty of PMI numbers due out. In the Asian region, we’ll have China HSBC flash manufacturing PMI, while in Europe we have French and German PMI due out tomorrow. With growth concerns remaining one of the main issues in the global economic story, all this data will be closely watched. RBA Governor Stevens' speech will drive expectations for future RBA policy, particularly with Q2 CPI data and mixed expectations for further easing. As a result, it could be a pretty big day for the Aussie dollar.

On a stock level, we expect a relatively flat start for BHP Billiton, with its ADR pointing to a 0.1% gain to $30.59. The resources were heavily sold off yesterday and are likely to be in for another big day with some key data due out of China. Billabong will be one to watch, with TPG reported to have submitted a new bid for BBG at $1.45 a share, representing a premium of 32% to yesterday’s close of $1.10.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0280 -0.0029 -0.28%
ASX (cash) 4103 -26 -0.6%
US DOW (cash) 12702 -45 -0.35%
US S&P (cash) 1347.4 -6.4 -0.47%
UK FTSE (cash) 5546 -55 -0.98%
German DAX (cash) 6421 -127 -1.94%
Japan 225 (cash) 8459 -49 -0.58%
Rio Tinto Plc (London) 28.23 -0.68 -2.36%
BHP Billiton Plc (London) 17.66 -0.51 -2.81%
BHP Billiton Ltd. ADR (US) (AUD) 30.59 0.04 0.13%
US Light Crude Oil (August) 88.05 -1.98 -2.20%
Gold (spot) 1577.1 0.5 0.03%
Aluminium (London) 1875.5 -4 -0.21%
Copper (London) 7434.5 -33 -0.44%
Nickel (London) 15612.5 -126 -0.80%
Zinc (London) 1865.75 -1 -0.06%

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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