IG Markets - Morning Prices 23 July 2010

IG Markets - Morning Prices 23 July 2010

IG Markets – Morning Prices

Gains for the day came courtesy of better-than-expected earnings results from UPS, Caterpillar, AT&T and 3M amongst others, while a smaller-than-expected fall in new home sales was well received by the market.

Given the leads from offshore and the performance of the SPI overnight IG Markets are calling the market to unwind at 4432, up 1.3%. Technical traders will be keen to see the index close above the 50 day moving average (4411) a level it has recently struggled to hold. A positive day in Australia should ensue with risk taking flowing through in cyclical and high beta stocks.
Defensive names should underperform the market today, although we may see some hesitance in traders to take out big positions ahead of tonight European bank stress tests. Given we have seen a positive move in the Euro overnight traders are speculating that the stress test will deliver a clean bill of health in the major financial institutions in Europe, although to retain some credibility we may need to see some bank failures. There are still many questions traders have around these stress test and given they are the most talked about event this week if traders are satisfied we could see the Euro trade above 1.30 and the S&P back above 1100.

The day’s price action continues the market’s current “yo-yo” mentality where sentiment is seemingly flipping from optimistic to pessimistic on daily basis. The overnight release of the European Union’s “Bank Stress Tests” looks to be a defining moment for global markets and will go a long way to establishing a more sustainable outlook for the remainder of the year – whether that’s bullish or bearish remains to be seen.

Given a key criteria for the RBA to raise rates by 25 basis points in August is a successful stress test we could see some volatility in the Australian dollar. As it stands the IG Markets binary to raise rates by 25bp stands at 27.5%.

Material stocks should perform well today with good gains expected in all our heavyweight miners. BHP’s adr is pointing to an opening price of $39.70 so traders here will be hoping it can close out the day above $40. The higher crude price should support our energy names and the highlight in the sector will no doubt be Woodside Petroleum’s Q2 production report.

The banks as well should support the market after we saw the S&P financial sector up 3.1%, the best performing sector in the market.

Market Price at 7:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 0.8930 0.0173 1.98%
ASX (cash) 4432 57 1.30%
US DOW (cash) 10300 195 1.93%
US S&P (cash) 1089.5 22 2.06%
UK FTSE (cash) 5303 153 2.97%
German DAX (cash) 6126 151 2.52%
Japan 225 (cash) 9321 101 1.10%
Rio Tinto Plc (London) 33.15 0.68 2.08%
BHP Billiton Plc (London) 19.65 0.47 2.42%
BHP Billiton Ltd. ADR (US) (AUD) 39.70 0.82 2.10%
US Light Crude Oil (Sep) 79.10 2.69 3.51%
Gold (spot) 1195.0 12.0 1.01%
Aluminium (London) 2035 27 1.34%
Copper (London) 6975 115 1.68%
Nickel (London) 20205 710 3.64%
Zinc (London) 1926 8 0.42%
RBA Cash Rate to be raised by 25bp (Aug) (%) 27.50 2.50 2.50%

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


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