IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Sentiment improved in the European session on the back of comments from the ECB's Ewald Nowotny that ‘there are pro arguments’ in favour of granting the ESM a banking license. The euro and other risk currencies made significant ground coming off yesterday’s lows following the comments. Gains in the European session came despite some disappointing economic data in Germany and the UK. Adding to the pressure on the authorities are signs of further macro weakness in the core, the latest being Germany's July IFO survey, which revealed hefty declines in both the current assessment and expectations. The UK is also feeling the effects of eurozone contagion, with the 0.7% quarter-on-quarter contraction in Q2 GDP keeping the pound on the defensive. The recovery in risk stalled in the US session when new home sales disappointed and Apple’s result weighed.

Ahead of the open, we are calling the Aussie market up 0.2% at 4133. The ASX 200 enjoyed a strong run into the close yesterday, which saw it close near its high of the day. We could see this momentum filter through to today’s session, particularly with some fairly positive leads for resource names. Caterpillar, the largest maker of construction and mining equipment, raised its full-year earnings forecast as increasing demand from North American builders and overseas miners bucks an economic slowdown. Resource stocks will also get a lift from some gains in commodity prices. There is nothing on the local economic front to look out for. Elsewhere in the region, the yen will be in focus, with BOJ Governor Shirakawa scheduled to speak. USD/JPY shorts could be squeezed out by any jawboning.

James Hardie (JHX) will be one of the stocks to watch today following the disappointing housing data out of the US. With a fairly large exposure to the US housing sector, JHX generally reacts to US housing data. The stock has had a pretty good run over the past couple of months and seems to be forming a base at $8, which is now near-term support. Qantas is back in the headlines today on reports of it being close to a tie-up with Emirates. The troubled airline is looking for an alliance to help revive its troubled international arm. Yesterday, we saw Newcrest Mining shares rally ahead of its production report which is due out today. As a result, the gold miner will be one to watch today.

Market Price at 6.30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0317 0.0096 0.93%
ASX (cash) 4133 10 0.23%
US DOW (cash) 12693 130 1.03%
US S&P (cash) 1338.7 8.1 0.61%
UK FTSE (cash) 5501 28 0.52%
German DAX (cash) 6416 60 0.95%
Japan 225 (cash) 8400 34 0.41%
Rio Tinto Plc (London) 27.64 -0.27 -0.98%
BHP Billiton Plc (London) 17.82 0.09 0.52%
BHP Billiton Ltd. ADR (US) (AUD) 30.70 -0.15 -0.48%
US Light Crude Oil (September) 88.95 0.91 1.03%
Gold (spot) 1603.9 19.7 1.24%
Aluminium (London) 1880 1 0.07%
Copper (London) 7480 29 0.39%
Nickel (London) 15975 125 0.79%
Zinc (London) 1863 4 0.23%

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

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