IG Markets - Morning thoughts and opening prices

Good morning,

It was a fairly subdued session for risk assets after services PMI releases in Europe mostly disappointed. There were no significant developments on the Spain front, implying Prime Minister Mariano Rajoy’s stance that a bailout is not imminent continues to hold. Markets participants also continue to wait for a verdict from Moody’s and the Troika report on Greece. Risk assets held a bit better in the US session after the ADP non-farm employment change and the ISM non-manufacturing PMI both exceeded expectations. AUD/USD and EUR/USD remained in fairly tight ranges with the former managing to hold its ground above 1.02 after the recent slide and the latter consolidating around 1.29.

Ahead of the open, we are calling the Aussie market up 0.1% at 4444. This mild rise is reflective of the subdued performances by risk assets overnight. Of course yesterday’s high of 4454.6 will be the key level to watch in the near term. However, most traders would probably prefer to buy on weakness into the 4420 region. After the recent run, the market just seems a little toppish at these levels and some consolidation would be healthy before the next move higher. On the economic front, today we have building approvals and retail sales data on the calendar. This could be a source of volatility for AUD/USD, which looks like it could be in for some relief after forming a base at 1.02. Should this data exceed expectations, this could be a catalyst for a short-term recovery.

On a stock level, we expect a softer start for BHP Billiton with its ADR suggesting it will be down 0.7% at $33.19. This is likely due to the 4% drop seen in oil prices and could also hamper the performance of some of the energy names. BHP is also reported to be pursuing Petrobas’ Gulf of Mexico assets. Gold edged higher and this will be supportive of some of the gold names. Coal stocks will be in focus yet again today after some big moves in the likes of Cockatoo Coal, Bathurst and Guilford yesterday. Today’s economic releases will also put retailers and building products companies on the radar.

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.

STAN SHAMU
Market Strategist
www.igmarkets.com.au

ENDS

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