IG - Morning Thoughts and Opening Calls
Commodities dominated markets overnight with oil, gold and silver all falling like a stone. Oil and gold tumbled, losing
2.3% respectively to 94.46 a barrel and $1,562 per ounce while silver plummeted, dropping 3.5% to $28.43. This lead
dragged stocks and indices with it and saw the S pulled back from a five-year high to be down 1.04% to 1515 points heading into the close. There was also a rumour
flying around that a major commodities hedge fund was forced to sell out of long positions as it had found itself with
liquidly troubles.
Currencies were the other big movers overnight, with pairs shifting in full percentages as the ‘currency wars’ moved
into the minor crosses. NZD/USD dropped like a stone, down 1.4% to $0.8353 after RBNZ Governor Graeme Wheeler stated
that the bank stood ready to influence the exchange rate, while GPB/USD fell 1.3% to $1.5235 on the release of the
latest Bank of England minutes; this showed that board members are backing the plan to expand on the current asset
purchase strategy.
At the same time, the FOMC minutes where released in the US, showing the Fed board are divided on the current strategy
and that the board is starting to turn slightly hawkish. Policy-makers were voicing opinions that the current asset
purchase plan should be able to vary its pace in response to the changing economic environment. This saw the US dollar
shoot up; AUD/USD dropped 1.09% to $1.0243, and EUR/USD dropped 0.8% to $1.3279. The minutes did show that the main
sticking point was the stubbornly high unemployment rate of 7.9%, which caused some to suggest that pulling the current
plan would adversely affect this figure, while others believe exiting the purchase plan early is needed for long-term
prosperity.
Global leads aside; 31 individual companies are reporting to the market today. The most notable will be AMP, ASX,
Alumina, Brambles, Fairfax, IAG, Iluka, Origin, Qantas and Tatts Group. A very large array of stocks and as we saw
yesterday, if you don’t hit your mark, prepare for some short-term pain. Yesterday Suncorp, Fortescue Metals and Sonic
Healthcare all missed key figures and were promptly dealt with. Guidance is also a key to investors’ hearts at the
moment and no more is that seen than with Monadelphous. The stock has lost $4.30 (-15%) in two days after FY14 guidance
suggested the company is in for a consolidation period. This means big swings will be the order of the day today; watch
the results of Fairfax, Qantas and Iluka in particular.
Moving to the open, we are calling the ASX 200 down 32 points to 5067 (-0.62%). So today could be the biggest fall of
the year, with the largest drop so far being the 0.57% decline in early January. Not that a 0.6% fall is big in
comparison to some of the monsters we have had over the last few years. BHP’s ADR is pointing to a 2.73% dive this
morning to $37.60 after being hammered in London overnight. With BHP making up a massive 12% of the market, this will no
doubt see RIO, FMG and the rest of the materials space following suit. However with a predicted 0.6% drop in the market,
the yield-play seven (the big four banks, Telstra, Wesfarmers and Woolworths) look like continuing to outperform and
should stop our market from falling further. So it will be a very busy day again today as we approach the middle-to-end
of the local reporting season, with investors again weighing up whether stocks are ahead or lagging the market.
MarketPrice at 8:00am AESTChange Since Australian Market ClosePercentage ChangeAUD/USD1.0249-0.0110 -1.06%ASX (cash)5069-30 -0.59%US DOW (cash)13925-110 -0.78%US S (cash)1513.1-20.0 -1.30%UK FTSE (cash)6368-3 -0.05%German DAX (cash)7709-50 -0.64%Japan 225 (cash)11423-52 -0.46%Rio Tinto Plc (London)36.46-0.67 -1.81%BHP Billiton Plc (London)21.83-0.53 -2.36%BHP Billiton Ltd. ADR (US) (AUD)37.60-1.05 -2.73%US Light Crude Oil (April)94.90-2.13 -2.19%Gold (spot)1564.55-42.2 -2.63%Aluminium (London)2105-14 -0.64%Copper (London)7964-117 -1.45%Nickel (London)17043-386 -2.21%Zinc (London)2355-30 -1.27%Iron Ore158.90.9 0.57%
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