Good morning,

In the US overnight, stocks continued their march higher as the Federal Reserve maintained its views on the slow pace of economic recovery. It said the US economy is improving, but not at a brisk enough rate to require an alteration in its plan to buy US$600 billion in long-term securities to bolster the economy before the middle of the year.

The technology-heavy NASDAQ was the best performer, up 0.8%. Both the S&P 500 and Dow Jones Industrial Average flirted with key psychological levels. The S&P 500 added 0.4% to finish at 1297 while the Dow rose 0.1% to 11986.

Locally, we’re calling the ASX 200 to open 02% higher at 4817 following a strong set of leads, especially from the commodities based sectors. It looks like we’re set for broad-based gains, with both the energy and material sectors likely to add the bulk of the points. They both clearly benefitted from the confirmation that Federal Reserve will continue with its aggressive stimulus plans.

The energy space was the best US performer, up 2.4% after Crude Oil prices rose 0.4% to US$87.75/barrel. This came despite a sharp rise in US Crude Oil inventories. In terms of stocks, heavyweights ExxonMobil, ConocoPhillips and Chevron were all up more 0.6%.

Material leads from London were very strong with base metals on the London Metals Exchange all rising between 0.9% and 2.6%, with zinc the top gainer. In normal equities trade, both Rio Tinto and BHP Billiton advanced 1.2% and 0.6% respectively. Not surprisingly, the Australian-listed BHP Billiton is called to open 0.8% firmer at $45.40. US resources stocks surged as well, with the likes of Freeport McMoRan, Alcoa & Nucor Steel all higher by more than 2.2%.

Gold names should also be well supported after the precious metal rose 0.9% to US$1344/oz. Elsewhere, industrial (0.6%) & technology (0.6%) names may add a few points following a solid session.

On the downside, we may see some modest weakness among financial names after they drifted lower, finishing 0.1% softer on the session. Bank of America, Wells Fargo and Citigroup were all down more than 0.2%.

In summary, it looks like the market is set for a positive session, with offshore stocks benefitting from the Federal Reserve’s commitment to its stimulus plan. The only economic data due is the MI Leading Index at 10.30am, but this rarely has any impact on markets. Instead, markets are likely to be driven by overall sentiment, with Asian trade, especially China in focus.

In currency markets, both the AUD and Euro benefitted from a weaker US dollar following the Federal Reserve’s comments. The AUD rose to a high of 0.9996 before settling around the 0.9985 level. The Euro continued its recent rally and is trading nears session highs of 1.3705.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 0.9980 0.0022 0.22%
ASX (cash) 4817 9 0.18%
US DOW (cash) 11988 10 0.08%
US S&P (cash) 1297.1 5 0.40%
UK FTSE (cash) 5979 15 0.24%
German DAX (cash) 7140 48 0.67%
Japan 225 (cash) 10433 -10 -0.10%
Rio Tinto Plc (London) 44.00 0.52 1.21%
BHP Billiton Plc (London) 24.46 0.14 0.55%
BHP Billiton Ltd. ADR (US) (AUD) 45.40 0.35 0.78%
US Light Crude Oil (Mar) 87.74 0.33 0.38%
Gold (spot) 1344.0 11.70 0.88%
Aluminium (London) 2387.00 27 1.14%
Copper (London) 9330.00 80 0.86%
Nickel (London) 26500.00 600 2.32%
Zinc (London) 2279.00 58 2.61%
RBA Cash Rate to be raised by 25bp (Feb) (%) 3.00 0.0 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.

ENDS

© Scoop Media