IG Markets Morning Prices & Thoughts

IG Markets Morning Prices & Thoughts

In the US on Friday night, the major indices closed out a very positive month with a choppy session, finishing flat. Investors and traders were happy to stay or head for the sidelines in preparation for this week’s huge data load which includes the outcome from the FOMC meeting, mid-term elections, US non-farm payrolls and a swathe of US earnings reports.

All three of major indices finished the session unchanged. In terms of the domestic market, unsurprisingly the ASX 200 is called to open 2 points firmer at 4663 following the flat overnight leads.

The major mover in terms of sectors was the basic materials space, which rose 0.8% in US trade and was easily the best performer. However, the earlier leads from London weren’t brilliant, with base metals on the LME mixed at best. In normal London trade, both Rio Tinto and BHP Billiton fell 1.7% and 0.7% respectively. BHP’s ADR is calling the locally listed stock to open absolutely flat at $41.92.

There could be an extra focus on BHP today as there was a raft of information released over the weekend regarding its bid for Potash. Speculation includes reports suggesting BHP are ready to sweeten the deal by as much as 10% and also that Potash are in talks with 15 other parties about some sort of transaction.
Elsewhere, leads for the other major sectors were lacklustre at best and all traded within a -0.1% and 0.1% range.

In summary, it looks like we’re headed for a quiet start to a huge week as the combination of an ‘unofficial’ holiday and flat leads point towards a low volume environment. However, there could still be some movement, especially among the resource names as we’re expecting to see the latest manufacturing data from China around midday.

Currency traders on Friday night resumed their ‘anti USD’ stance with the currency losing ground against all major currencies, most notably the New Zealand dollar which gained 1.7% for the session. After initially gaining ground against risk currencies in the Asian session, the USD came under heavy selling pressure at around 21.00 AEST, with traders continuing to speculate on next week’s outcome by the Federal Reserve.

Economic data was also a catalyst for the USD sell-off; whilst US GDP grew 2% as expected, it highlighted the need to artificially stimulate growth. Core PCE or the price gauge which the Fed prefers to use as a measure of inflation, which is tied to consumer spending and strips out energy and food costs grew at an annual rate of 0.8% in the third quarter, lower than expected; generally, a low inflation environment is negative for a currency.

After initially falling to 96.78, the AUDJPY pushed up to a session high of 98.40, with the Yen closing out the session right on a new 15 year low of 80.39. It is expected to be a pivotal week for Yen. It looks like the BoJ is going to be tactical and wait for the reaction in the currency market to the FOMC meeting before potentially intervening and selling Yen.

If the market is disappointed by the initial size of the Fed’s bond purchase program we could see the USD strengthen against the Yen. The BoJ could capitalise on this and come to the market with a sizeable intervention, which would likely have a huge effect on the currency, pushing it nicely away from the 80 level.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 0.9849 0.0087 0.90%
ASX (cash) 4663 2 0.03%
US DOW (cash) 11126 62 0.56%
US S&P (cash) 1183.2 5 0.43%
UK FTSE (cash) 5680 11 0.20%
German DAX (cash) 6620 38 0.58%
Japan 225 (cash) 9174 -39 -0.42%
Rio Tinto Plc (London) 40.36 -0.70 -1.69%
BHP Billiton Plc (London) 22.14 -0.07 -0.34%
BHP Billiton Ltd. ADR (US) (AUD) 41.92 0.00 0.00%
US Light Crude Oil (Dec) 81.45 -0.25 -0.31%
Gold (spot) 1359.4 19.4 1.45%
Aluminium (London) 2354 29 1.25%
Copper (London) 8190 -62 -0.75%
Nickel (London) 23010 120 0.52%
Zinc (London) 2425 -20 -0.82%
RBA Cash Rate to be raised by 25bp (Nov) (%) 24.00 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