IG Morning Throught and Opening Calls
Good Morning
Overnight, US stocks followed their Asian and European counterparts and retreated for the second straight day as
investors gear up for the US fourth quarter reporting season. With news thin on the ground, most investors treaded
cautiously which caused the S 500 to stumble and finish the day down 0.36% to 1456 points. With equities trading lower, most investors moved to US
treasuries and gold with US 10-year bonds yields falling back under 1.90% to 1.87%, while gold rallied 0.8% to $1660 an
ounce after four straight days of trading lower. With Alcoa releasing its earnings this morning and it typically being a
gauge for the rest of the season, investors in both Asia and US will wait for clarity over the coming days.
Over in Europe and even with the release of a consumer sentiment report that showed confidence in the 17-nation eurozone
had increased in December to 87 compared to 85.7 in November, most major indices retreated. European markets instead
turned their attention to German export data which declined in November and lead most investors to speculate that the
recent gains in the region may in fact be overdone. This follows on from German Chancellor Angela Merkel’s comments that
Europe’s debt crisis was far from over and that the region was only just starting to see the effects of stabilisation
projects negotiated over the previous years. This saw the DAX retreat for the second straight day down 0.48% to 7695
points and it has now erased all of its gains in 2013. In London the FTSE followed suit and lost a further 0.18% 6053
points. The export data also affected EUR/USD and caused the euro to lose 0.23% to $1.3085 after three days of gains.
In other currency news, after reaching a two and half low against the green back, the yen has now recovered almost 1.3%
in two days to be at 87.114. With investors now having digested the news from the Bank of Japan and Prime Minister
Shinzo Abe that Japan will stimulate its economy later this month, the yen has now appreciated against all but one major
trading pair, showing that more may need to be done to hold the currency down.
Moving to the Australian market, domestic news is expected to have a big impact on us with the release of retail sales
for December coming out later today as well as the Housing Industry Association’s new home sales. We expect both reports
to be positive with retail sales anticipated to have grown around 3.3% for December. We are therefore calling the ASX
200 up 0.14% to 4697 points with the consumer discretionary sector the one to watch. Iron ore continues to rocket
upwards reaching $158.50 a tonne overnight, however with most mining companies forecasting a median price of $120 a
tonne, most investors see current prices as overheated and overdone. This sees BHP’s ADR down 0.27% to $37.10 as
investors reassess the current run up in the materials sector. What is encouraging for the local market is the Aussie
dollar. After falling yesterday due to the release of Australia’s terms of trade, the dollar has recovered to be back
above $1.05, showing overseas investors are looking to cash in on recent Chinese and US economic data. AUD/USD is
currently $1.0507
MarketPrice at 8:00am AESTChange Since Australian Market ClosePercentage ChangeAUD/USD1.04990.0017 0.16%ASX (cash)46977 0.14%US DOW (cash)13335-27 -0.20%US S (cash)1456.6-2.0 -0.14%UK FTSE (cash)60676 0.10%German DAX (cash)7705-15 -0.20%Japan 225 (cash)10423-83 -0.79%Rio Tinto Plc (London)35.47-0.28 -0.78%BHP Billiton Plc (London)21.49-0.20 -0.93%BHP Billiton Ltd. ADR (US) (AUD)37.40-0.10 -0.27%US Light Crude Oil (February)93.290.08 0.09%Gold (spot)1658.4510.3 0.63%Aluminium (London)20661 0.03%Copper (London)8077-6 -0.07%Nickel (London)1736841 0.24%Zinc (London)23237 0.32%Iron Ore158.54.6 2.99%
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.
EVAN LUCAS
Market Strategist
ENDS