IG Markets - Morning Thoughts
The positive risk tone from the Asian session continued into European trade with risk assets remaining well bid.
European equities gained ground despite some relatively mixed PMI readings. US markets were closed for the Labor Day
holiday and this limits the leads going into today’s Asian session. Speculation that central banks will act to provide
further easing continues to support investor risk appetite. With China posting some disappointing PMI numbers, market
participants have grown increasingly optimistic this will force Chinese policymakers to take fresh steps to stimulate
the economy. At the same time, optimism around Fed easing has ramped up following Fed Chief Ben Bernanke’s speech in
Jackson Hole. EUR/USD managed to push through 1.26 again and is currently consolidating just below 1.26. However, the
Aussie dollar has not quite mirrored the performance in the rest of the risk space, with AUD/USD continuing to be sold
into strength.
Ahead of the open, we are calling the Aussie market up 0.5% at 4349. The highlight of today’s session will be the RBA’s
interest rate decision at 2.30pm. The Central Bank is widely expected to keep rates on hold at 3.5% and we suspect the
accompanying statement will carry more weight. The market is pricing in another rate cut by the end of the year and
therefore any change in tone in the statement could be a major market mover. A key concern for the RBA will be a high
Aussie dollar relative to lower commodity prices (iron ore). The Aussie dollar and interest-rate sensitive stocks will
be in focus on the back of the statement. We also have current account numbers due out at 11.30am ahead of tomorrow’s
GDP figures.
On a stock level, we expect a firmer start for the resource names after a positive session for commodities during
European trade. Gold stocks will remain in focus after the precious metal held at elevated levels and even printed a new
high of around $1695. We saw some impressive gains in the mid-tier gold space yesterday and we wouldn’t be surprised to
see that run continue today. The retailers could remain under pressure leading up to the interest rate decision. We
already saw the sector struggle yesterday on the back of the weaker-than-expected retail sales data.
MarketPrice at 6:30am AESTChange Since Australian Market ClosePercentage Change
AUD/USD 1.0247 -0.0026 -0.25%
ASX (cash) 4349 20 0.45%
US DOW (cash) 13114 50 0.38%
US S (cash) 1412.4 6.1 0.44%
UK FTSE (cash) 5756 57 0.99%
German DAX (cash) 7015 58 0.83%
Japan 225 (cash) 8797 13 0.14%
Rio Tinto Plc (London) 27.96 0.61 2.21%
BHP Billiton Plc (London) 18.55 0.19 1.05%
BHP Billiton Ltd. ADR (US) (AUD) - - -
US Light Crude Oil (October) 97.05 0.77 0.79%
Gold (spot) 1692.4 3.6 0.21%
Aluminium (London) 1925 23 1.19%
Copper (London) 7665 4 0.05%
Nickel (London) 16196 54 0.33%
Zinc (London) 1990 6 0.30%
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.
ends