IG - Morning Thoughts And Opening Prices
Good morning,
Risk assets continued to exhibit signs of a breakdown in the correlations we saw last year. Although risk assets mostly
gained ground, there was no dominant theme in place like we used to see last year. Once again it was a fairly quiet
session on the economic data front and as a result market participants focused on US earnings for some direction.
Positive earnings from the likes of Pfizer helped drive markets higher, with the S recording its tenth positive session out of 11. Looking at the FX space, EUR/USD broke out of the recent range and went
on to test the 1.35 level. The pair is still hanging around there and with the current momentum we wouldn’t be surprised
to see it push through 1.35 in Asia today. AUD/USD continued to drift higher and is just testing the 1.047 region. We
feel the pair might encounter some resistance in the 1.047 to 1.05 region, as it was a previous support zone for the
pair. This could result in some near-term weakness for the pair. USD/JPY has remained range bound at around 90.7, with
limited data flow out of Japan. The Fed meeting tomorrow morning will be key for these FX pairs going forward.
Ahead of the open we are calling the Aussie market up a couple of points at 4891. Yesterday’s high of 4897 will be the
key level to watch in the near term. The local market has gained ground for nine consecutive sessions and it’ll be
interesting to see if we can maintain that run today given the lack of local drivers. There is nothing to look out for
on the local economic calendar. Yesterday’s gains were mainly pinned on the banks and as long as market perceptions of
downside pressure on interest rates persist, they are likely to continue holding at elevated levels. As a result, next
week’s rate decision and statement will be of significance for the yield trade. A fairly good UK session for materials
and energy might feed through to the local market today. On a stock level we expect to see a strong start for BHP with
its ADR pointing to a 0.8% gain to $37.46. Iron ore prices have remained steady at 148.40 and this will help support the
iron ore space. The insurers will remain in focus on the back of floods in Queensland and parts of New South Wales. Keep
an eye on the likes of IAG, QBE and SUN. Miners with operations in affected areas might also struggle. Wesfarmers
reports Q2 results today and we feel Coles’ performance will be one of the key issues to watch. Analysts are expecting
4.5% to 5.5% sales growth and for Coles to outperform Woolworths (which reports tomorrow) by 4%.
MarketPrice at 8:00am AESTChange Since Australian Market ClosePercentage ChangeAUD/USD1.04660.0025 0.24%ASX (cash)48912 0.03%US DOW (cash)1396463 0.46%US S (cash)1508.66.8 0.45%UK FTSE (cash)634436 0.56%German DAX (cash)785714 0.18%Japan 225 (cash)1090240 0.37%Rio Tinto Plc (London)35.760.70 2.00%BHP Billiton Plc (London)21.510.39 1.86%BHP Billiton Ltd. ADR (US) (AUD)37.460.29 0.77%US Light Crude Oil (March)97.520.81 0.84%Gold (spot)1663.704.5 0.27%Aluminium (London)206314 0.67%Copper (London)811247 0.58%Nickel (London)17838211 1.20%Zinc (London)240613 0.52%Iron Ore148.40.0 0.00%
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
ENDS