IG Markets Morning Prices

Good morning,

In the US overnight, most stocks finished flat to modestly weaker, but well off their lows as investors tried to balance mixed economic and corporate news with further tightening concerns in China. The technology sector retreated for a second straight session, although a stellar result from Google after hours will help improve sentiment.

The Dow Jones Industrial Average was the best performer, finishing unchanged for the session while the broad-based S&P 500 drifted 0.1%. The tech-heavy NASDAQ retreated 0.8%.

Domestically, the ASX 200 is called to open the session 0.2% weaker at 4775, below the all important 4800 level. Once again, it looks like the materials and energy sector will lead the market lower.

The basic materials sector in the US was the worst performer, down 1.4% as base metals on the London Metals Exchange finished the session mostly weaker. Leads from London equities trade were terrible too with Rio Tinto and BHP both hammered to the tune of 3.2% and 3.6% respectively. Not surprisingly, BHP’s ADR is calling the local stock 1.4% softer at $44.55.

Energy names will likely come under pressure too after crude oil futures fell 2.5% to US$89.39 per barrel. The US energy sector lost 0.7% with the likes of ExxonMobil, Chevron and ConocoPhillips all down more than 0.3%.

However, on the upside we may see some buying interest among financials after they rebounded in US trade; the sector added 0.5% to be one of the best performers. After a number of disappointing earnings, Morgan Stanley jumped more than 4.5% after it reported a profit that soared 60% from the previous period thanks to strong retail brokerage fees offsetting poor trading results. JP Morgan, Bank of America and Citigroup were all stronger by more than 0.8%.

In summary, it looks the local market will finish the week on a down note as unwarranted fears, in our opinion, over China weigh on sentiment. In currency markets, we saw the USD push higher against all G10 currencies, with commodity currencies bearing the brunt of the selling.

On one hand we had strong US data which helped flows into the USD and on the other we had commodity prices aggressively sold off as investors worried that the high Chinese GDP figure lends weight to further measures from the PBOC to cool their economy.

Certainly the pullback we are seeing in gold, silver, copper and oil caused the AUD to weaken to 98.33, although it has recovered a little in late US trade to be last at 0.9873. Locally, the release of import/export prices at 11:30am is not expected to impact trade too much; the dollar will no doubt take its cues from Shanghai given the heightened volatility of late.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 0.9885 -0.0080 -0.80%
ASX (cash) 4775 -9 -0.19%
US DOW (cash) 11828 -9 -0.07%
US S&P (cash) 1280.7 -2 -0.16%
UK FTSE (cash) 5885 -86 -1.45%
German DAX (cash) 7052 -34 -0.48%
Japan 225 (cash) 10470 33 0.31%
Rio Tinto Plc (London) 42.37 -1.38 -3.15%
BHP Billiton Plc (London) 23.82 -0.88 -3.56%
BHP Billiton Ltd. ADR (US) (AUD) 44.55 -0.64 -1.42%
US Light Crude Oil (Mar) 89.39 -2.31 -2.52%
Gold (spot) 1346.1 -22.80 -1.67%
Aluminium (London) 2411.00 -24 -0.99%
Copper (London) 9357.00 -220 -2.30%
Nickel (London) 25680.00 6 0.02%
Zinc (London) 2339.00 -43 -1.81%
RBA Cash Rate to be raised by 25bp (Feb) (%) 4.00 0.0 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

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