IG Markets Opening Calls

IG Markets Opening Calls

US markets continued to see profit takers as the Middle Eastern situation provided no clearer signs of a resolution. With the price of crude touching the highest level since 2008 the equity market responded to fears that higher crude prices will potentially derail the global economic recovery.

Overnight we saw NASDAQ and the Dow Jones Industrial average both close down 0.9% at 2300 and 12105 respectively. Interestingly whilst we saw the S&P close 0.6% lower at 1307 the index was well supported at 1300 – the low of the day.

We are seeing a clear tug-of-war between an evident US recovery; as seen by the Existing home sales which rose 2.7% marking three back to back monthly gains, against a backdrop of a deteriorating global macro picture. 

Looking at currencies and it was interesting to see the US dollar fall against all G10 currencies as traders used the Swiss franc and the Japanese Yen as safe haven currencies. The two best performing currencies were the Norwegian Krona (NKR) and Swedish Krona (SKR) as WTI crude touched $100, given their leverage to oil prices one could expect these currencies to do well if we see a continued bid in oil.  In focus notably were the Euro and Sterling which both pushed higher despite risk aversion still evident in the equity and commodity markets.

As traders question who will be the first major developed central bank to lift rates the two standout candidates are the Bank of England and the ECB. With inflation a key concern for both central banks last night we saw a repositioning in the BOE with minutes of their meeting two weeks ago revealing that 3 members are voting for a rate hike sooner rather than later. The clear question is whether the three hawks can convince the remaining members a rate hike is the best way to solve the UK’s clear inflation problem. Sterling traded to an overnight high of 1.6272 but sold off as traders took profits near to the year high.

Given the lead we should see the ASX 200 unwind around 4821, down around 0.5%. It will no doubt be an eventful day with around 30 companies reporting earnings (the most of any day in earnings season). At 11:30 we have a reading on Australian private sector credit which may have a small influence on the AUD.

Looking at the sectors one would expect outperformance from energy stocks given the higher oil price. BHP’s ADR is pointing to a weaker open and could be well supported above $46.00 as clearly the market sees this as a key ‘buy on dips’ candidate at the moment.

However, the central focus will invariable be on headlines that develop out of the Middle East. An interesting story out this morning was that Saudi Arabia is offering a financial support package of $36b including a 15% increase in public sector workers pay checks which may help boost sentiment as it shows they are clearly concerned with an uprising there.

Market

Price at 8:00am AEST

Change Since Australian Market Close

Percentage Change

AUD/USD

1.0018

-0.0001

-0.01%

ASX (cash)

4821

-25

-0.52%

US DOW (cash)

12121

-108

-0.88%

US S&P (cash)

1308.4

-11

-0.87%

UK FTSE (cash)

5910

-51

-0.85%

German DAX (cash)

7174

-110

-1.51%

Japan 225 (cash)

10553

-30

-0.28%

Rio Tinto Plc (London)

42.07

-1.34

-3.08%

BHP Billiton Plc (London)

23.38

-0.75

-3.13%

BHP Billiton Ltd. ADR (US) (AUD)

46.10

-0.47

-1.02%

US Light Crude Oil (Apr)

98.48

2.88

3.01%

Gold (spot)

1410.6

12.05

0.86%

Aluminium (London)

2530.00

15

0.60%

Copper (London)

9465.00

-55

-0.58%

Nickel (London)

28500.00

200

0.71%

Zinc (London)

2494.00

24

0.97%

RBA Cash Rate to be raised by 25bp (Mar) (%)

6.00

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. 

 ends

© Scoop Media