IG Markets Morning Prices & Thoughts

On Wall Street overnight, US stocks rallied to the highest levels in six-months as the mid-term elections got underway and the Federal Reserve Board began its two-day meeting that is expected to result in the announcement of another round of quantitative easing. The US dollar continued to weaken, further underpinning commodity prices.

Once again, the NASDAQ was the top performer, rising 1.2%. The broad-based S&P 500 added 0.8% while the Dow Jones Industrial Average closed 0.6% firmer.

Locally, the ASX 200 is called to open the session 0.4% higher at 4721 following the positive overnight leads that saw all US sectors finish firmly in the black.

We should see a fairly positive session on the domestic market today given the offshore leads. All of the heavyweight US sectors performed well, with materials, consumer discretionary and energy names of particular focus.

Base metal leads from the London Metals Exchange were mostly bullish while in normal London stock trade, Rio Tinto and BHP Billiton added 1.5% and 1.9% respectively. BHP Billiton’s ADR is calling the locally listed stock 0.5% stronger at $42.50. Gold names should be relatively unchanged after futures only rose 0.1% to US$13575 per ounce.

Elsewhere, the energy sector should be well bid after Crude Oil futures continued their ascent, rising another 1.3% overnight to be trading around the US$84.46 per barrel.

Financials may weigh a little after they underperformed on a relative basis in the US session. Bank of America and JP Morgan were the biggest decliners, losing 0.9% and 1.2% respectively. Locally, all eyes will be on Westpac’s FY result, which at first glance looks to be in line with market expectations. Investors will also be watching if any of the other banks choose to follow Commonwealth Bank of Australia’s lead by raising their variable mortgage rate by more than the 25 basis point RBA hike.

In summary, it looks like being a positive open to Wednesday’s session. Traders will likely be focusing on whether or not the market can decisively close above the psychologically important 4700 level or whether the sellers once again move in. It would not surprise at all to see the local market retreat during the Asian session ahead of tomorrow morning’s pivotal FOMC announcement.

In currency news, the AUDUSD pushed up to a high of 1.002 overnight following yesterday’s surprise interest rate hike from the RBA. The next 24 hours in foreign exchange markets are likely to be volatile, with everything revolving around what the FOMC say tomorrow morning at 5.15am.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 0.9996 0.0022 0.22%
ASX (cash) 4721 20 0.43%
US DOW (cash) 11209 62 0.56%
US S&P (cash) 1196.5 9 0.73%
UK FTSE (cash) 5763 73 1.28%
German DAX (cash) 6674 71 1.07%
Japan 225 (cash) 9212 64 0.70%
Rio Tinto Plc (London) 41.42 0.62 1.52%
BHP Billiton Plc (London) 22.77 0.42 1.88%
BHP Billiton Ltd. ADR (US) (AUD) 42.47 0.20 0.48%
US Light Crude Oil (Dec) 84.46 1.07 1.28%
Gold (spot) 1357.5 1.6 0.12%
Aluminium (London) 2430 45 1.89%
Copper (London) 8411 80 0.96%
Nickel (London) 23515 220 0.94%
Zinc (London) 2450 -15 -0.61%
RBA Cash Rate to be raised by 25bp (Dec) (%) 9.00 - -

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.

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