IG Markets: Morning Prices

On Wall Street overnight, stocks kicked off the New Year on the front foot as demand for equities pushed the major indices to new two-year highs. A report into US manufacturing showing it grew at the fastest pace in seven months in December was a big boost for sentiment.

Off the back of a 16.9% gain in 2010, the tech-heavy NASDAQ was the top performer overnight, adding 1.5%. The broad-based S&P 500 followed its 12.8% 2010 rise with a gain of 1.1% while the Dow Jones Industrial Average rose 0.8% following its 11% gain for 2010.

Locally, the ASX 200 is called to open the first session of the New Year 0.5% firmer following the bullish overnight leads.

The financial stocks were the standout performer in US trade, rising 2.2% and are likely to provide some sort of a boost for local names. News that Bank of America had settled claims for US$3 billion regarding poorly underwritten mortgages boosted confidence across the sector. Bank of America surged 6.4% while the likes of Goldman Sachs, Citigroup, JPMorgan, Wells Fargo and Morgan Stanley were all up more than 1.9%.

Technology and consumer discretionary names also had strong sessions with their respective sectors adding 1.1% and 1.2%.

Strength among US material names is likely to rub off in local trade after the basic materials sector added 0.8% despite the London Metals Exchange and London Stock Exchange being on holiday still. BHP’s ADR is calling the locally listed stock 1.1% higher on the open at $45.73. There should be some support for the precious metal miners after both gold and silver continued their recent strength. Gold added 0.6% since Friday’s close and is trading around the US$1414.5 level while silver is sitting around the US$30.70 level.

Elsewhere, we should see some gains among energy names after the US sector added 0.8% on the back of anther rise in crude oil futures. The black gold is up 2.4% since Friday’s Australian close to be around the US$91.66 level. On the flip side, those coal miners with operations in Queensland and northern NSW could continue to see some pressure as the flooding situation continues to worsen.

In summary, it looks like the Australian bourse is set to start the New Year on a positive note given the very strong lead in from US trade. With little in the way of economic news, markets will likely be driven by Asia’s reaction to the US session.

In the currency market, the AUDUSD is continuing to show strength versus the greenback. It has pulled back a little to be hovering around the 1.0166 mark. The euro has also continued its short-term strength and is trading around the 1.3355 level.

Market Price at 8:00am AEST Change Since Australian Market Close 2.10pm Friday Percentage Change
AUD/USD 1.0175 0.0006 0.06%
ASX (cash) 4768 22 0.47%
US DOW (cash) 11678 90 0.78%
US S&P (cash) 1271.9 13 0.99%
UK FTSE (cash) 5977 2 0.04%
German DAX (cash) 6976 54 0.78%
Japan 225 (cash) 10333 110 1.08%
Rio Tinto Plc (London) closed - -
BHP Billiton Plc (London) closed - -
BHP Billiton Ltd. ADR (US) (AUD) 45.73 0.48 1.06%
US Light Crude Oil (Feb) 91.66 2.11 2.36%
Gold (spot) 1414.5 8.5 0.60%
Aluminium (London) closed - -
Copper (London) closed - -
Nickel (London) closed - -
Zinc (London) closed - -
RBA Cash Rate to be raised by 25bp (Feb) (%) 9.00 0.0 0.00%

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