IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Overnight, US markets kicked off the first day of the new trading month with solid gains on the back of some better-than-expected economic data that put the focus back on the US economy and its gradually improving trend.

While there has been much speculation in recent days over the economic cost to the US of Hurricane Sandy, data releases last night were overwhelmingly positive. They have elevated expectations heading into tomorrow’s non-farm payrolls report – the last before next Tuesday’s Presidential election.

Weekly jobless claims fell to a seasonally-adjusted 363,000 (better than the 371,000 consensus), while the ISM service sector reading came in at 51.7, ahead of the 51.2 forecast. Elsewhere, the manufacturing PMI again topped 50, construction spending grew at 0.6% after contracting the previous month and consumer confidence levels were measured at their highest (72.2) in more than four years. After the devastation of the last few days, and amidst a lacklustre earnings season, this swag of positive news was clearly well received.

Locally, we are looking at a solid start to today’s session after an inexplicably weak day yesterday where the ASX 200 shed 1.3% to close at 4457. As things stand, the benchmark index is called approximately 33 points or 0.7% higher at 4490 on what should be relatively broad-based gains. Overnight, courtesy of that encouraging US economic data, base metal prices edged higher, while the iron ore price continued to consolidate around the US$120 per tonne level. This should see a bit of a snap back rally for many of our miners that were heavily sold off during yesterday’s route.

While materials and energy names are likely to pace any gains today, investors are again likely to be cautious as they always are on a ‘non-farms Friday’. That is particularly the case today. With many (east coast) investors taking holidays into the Melbourne Cup carnival week, and ahead of the US elections and RBA decision, afternoon profit taking may again come to the fore with traders and investors perhaps preferring to wait for greater clarity over these issues at the back-end of next week before making any key decisions.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0400 0.0029 0.27%
ASX (cash) 4490 32 0.72%
US DOW (cash) 13232 170 1.30%
US S&P (cash) 1427.4 21.4 1.52%
UK FTSE (cash) 5858 66 1.14%
German DAX (cash) 7336 73 1.01%
Japan 225 (cash) 9042 95 1.06%
Rio Tinto Plc (London) 31.65 0.60 1.94%
BHP Billiton Plc (London) 20.09 0.23 1.13%
BHP Billiton Ltd. ADR (US) (AUD) 34.49 0.67 1.99%
US Light Crude Oil (December) 86.82 0.53 0.61%
Gold (spot) 1714.9 -6.1 -0.35%
Aluminium (London) 1943 22 1.15%
Copper (London) 7832 49 0.63%
Nickel (London) 16300 81 0.50%
Zinc (London) 1889 19 1.02%
Iron Ore 120.3 1.00 0.84%

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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