IG Markets Morning Prices

Good morning,

On Wall Street overnight, stocks surged ahead of the Thanksgiving holiday following a barrage of largely better-than-expected economic data overnight that boosted confidence in the economic recovery. The most prominent report was the initial unemployment claims which fell declined sharply to the lowest level seen since July 2008; hopefully a sign that jobs are beginning to be created.

The technology-laden NASDAQ was the standout performer, jumping 1.9%, its biggest one day gain in seven weeks. Elsewhere, the broad-based S&P 500 rose 1.5% while the Dow Jones industrial Average gained 1.4%.

Locally, the ASX 200 is called to open 0.6% firmer at 4612 following the very bullish developments overnight. In almost direct contrast to yesterday’s session, were likely to see broad-based strength today, especially among the more cyclical sectors.

The materials space should be one of the best performers after it added 1.9% in US trade following a jump in commodity prices. On the London Metals Exchange, base metals were mostly firmer while in normal London equities trade, Rio Tinto and BHP Billiton gained 2.7% and 1.8% respectively. After the US session, BHP Billiton’s ADR is calling the locally listed stock 1% higher at $43.37.

The gold miners may see some moderate weakness after gold futures retreated 0.1% to US$1374.3 per ounce.

The energy names are likely to be among the leaders too after the US energy sector added 1.8% and Crude Oil futures surged 3% to US$84.11 from 4pm yesterday despite a sizeable increase in Crude Oil inventories.

Consumer discretionary, financial and industrial sector are all likely to be well supported too after their US peers gained between 1.5% and 2.3%.

In summary, it looks like we’ll see a broad-based rally for stocks today as bargain hunters continue to sift through beaten-up names.

Turning to currencies and overnight we saw the USD giving back some of its recent gains ahead of the Thanksgiving holiday as sovereign debt worries temporarily took a back seat. Instead, traders chose to focus on the strong initial jobless claims reports that potentially shows the US labour market may have turned a corner.

Weekly jobless claims fell to 407k, from 441k while continuing claims dropped 3.2% to 4.32m, the strongest numbers since July 2008. The 4 week moving average has dropped 51k since the end of August and now sits at 436k. An improving labour force is the desired end-product of the QE2 program and is central to a recovery in the US economy; this data encouraged traders to sell out of US treasuries, pushing up yields and making the dollar more attractive for overseas investors, hence we saw the USD/JPY rise to an overnight high of 83.66. We could see expectations ratchet up for this month’s nonfarm payroll as the trend on the weekly claims is evidently down and this could see a push toward 85 on USD/JPY.

It was a whippy and somewhat volatile session on risk currencies with the Euro being thrown around by S&P downgrading Ireland by two notches and assigning a negative outlook. Periphery spreads against German bunds are continuing to show contagion is a real threat while strong German IFO numbers, weekly jobless claims and new homes sales in the US, which declined 8.1% were among other influential factors. Looking at the price action the Euro traded down to 1.3285, hitting an overnight high of 1.3422.

The Australian dollar also responded to the strong jobs number and traded to an overnight high of 0.9853. Today’s private sector credit numbers at 11.30 could see it gravitate back to 99c if it beats the 3.1% growth eyed by economists.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 0.9812 0.0023 0.23%
ASX (cash) 4612 28 0.60%
US DOW (cash) 11180 98 0.88%
US S&P (cash) 1197.9 12 1.04%
UK FTSE (cash) 5674 49 0.87%
German DAX (cash) 6850 111 1.65%
Japan 225 (cash) 10130 87 0.87%
Rio Tinto Plc (London) 41.79 1.08 2.67%
BHP Billiton Plc (London) 23.09 0.41 1.79%
BHP Billiton Ltd. ADR (US) (AUD) 43.37 0.42 0.97%
US Light Crude Oil (Jan) 84.11 2.45 3.00%
Gold (spot) 1374.3 -2.0 -0.14%
Aluminium (London) 2262 -16 -0.70%
Copper (London) 8290 48 0.58%
Nickel (London) 22500 600 2.74%
Zinc (London) 2134 11 0.52%
RBA Cash Rate to be raised by 25bp (Dec) (%) 3.00 -2.00 -2.00%

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

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