IG Markets - Morning Prices October 22

Risk assets finished the week on a sour note as equities fell in European and US trade. Friday’s moves were mainly earnings driven, as reporting companies such as GE and McDonalds disappointed. Out of the 117 companies that have reported so far, 37% have beaten earnings estimates (below the historical average of 41%) and 21% have missed estimates (versus an average of 13%). Macro data was mixed with US existing home sales falling to 4.75 million, but coming in ahead of a consensus of 4.73 million. European current account was a big miss, at a surplus of €8.8 billion (versus €11.3 billion expected). The EU Summit concluded with no major developments, and therefore failed to inspire market participants. Subdued risk appetite on Friday saw the USD and JPY gain ground. As a result, risk currencies struggled as EUR/USD dropped to a touch above 1.3, while AUD/USD declined from around 1.036 to 1.031.

Ahead of the open, we are calling the Aussie market down 1.1% at 4521. We haven’t seen any big moves in the risk currency space upon reopening this morning, suggesting there haven’t been any fresh market moving leads since Saturday’s close. Commodities were also under pressure as the USD gained ground and risk appetite waned. As a result, resource names are likely to come under pressure at the open. On the economic front, we will hear from Wayne Swan today as the government looks to announce some measures to return the economy to a surplus in its budget review. Elsewhere in the region we have Japan’s trade balance and a speech by BoJ Governor Shirakawa. This puts the yen firmly in focus.

On a stock level, we expect a softer start for BHP Billiton with its ADR suggesting it will drop 1.5% to $34.48. There will be a lot of focus on the banks today after Goldman Sachs downgraded National Bank (NAB) and Westpac. NAB has also been hit by a slew of other downgrades from the likes of Macquarie and ML after its profit warning on Friday. Some analysts are beginning to feel banks are looking toppish at these levels. Graincorp is on the radar after Archer Daniels confirmed its plan to buy the company as it looks to gain strategic access to the Asian market.

Market Price at 9:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0316 -0.0048 -0.46%
ASX (cash) 4521 -51 -1.11%
US DOW (cash) 13321 -223 -1.65%
US S&P (cash) 1428.6 -27.0 -1.85%
UK FTSE (cash) 5865 -39 -0.66%
German DAX (cash) 7342 -75 -1.02%
Japan 225 (cash) 8846 -149 -1.66%
Rio Tinto Plc (London) 32.00 -0.60 -1.84%
BHP Billiton Plc (London) 20.34 -0.14 -0.70%
BHP Billiton Ltd. ADR (US) (AUD) 34.48 -0.52 -1.48%
US Light Crude Oil (December) 90.14 -2.41 -2.60%
Gold (spot) 1719.0 -17.7 -1.02%
Aluminium (London) 1970 -45 -2.23%
Copper (London) 8015 -205 -2.49%
Nickel (London) 16950 -370 -2.14%
Zinc (London) 1886 -36 -1.87%
Iron Ore 115.3 -0.20 -0.17%

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.

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