IG Markets: Morning Prices

In the US overnight, markets managed to post modest gains despite another jump in Crude Oil prices as tensions in Libya escalated further. Gaddafi’s forces seem to have regrouped, with media reports suggesting they have tried to re-take towns from the rebels and are using air power to drop bombs on oil and arms facilities. In a very worrying statement, Gaddafi promised a “bloodbath” in the battle to regain control.

Nonetheless, markets were able to shrug off these concerns as the latest round of US economic data continued to show strength; the ADP private jobs number showed a gain of 217,000, well ahead of the 180,000 expected.

The technology-laden NASDAQ was the top performer, rising 0.4% while the S&P 500 and Dow Jones Industrial Average added 0.2% and 0.1% respectively.

Locally, the ASX 200 is called to open the session 0.1% higher at 4806 following the mixed overnight session.

The energy sector was one of the best performers overnight, rising 0.6% as oil continued its surge higher; it’s now trading at US$102/barrel as geopolitical concerns across the Middle East heightened. The big US energy names all had positive sessions with the likes of ExxonMobil, Chevron and ConocoPhillips all up more than 0.3%. Hopefully we’ll see some of crude’s gains reflected in our big oil names today.

Materials names should be reasonably well supported following a modest rise of 0.3%, despite mixed base metal prices on the London Metals Exchange. The big miners were mixed in equities trade too, with Rio Tinto declining 1.1% and BHP Billiton rising 0.1%. However, BHP Billiton’s ADR is calling the locally listed stock to open 0.9% firmer at $46.45.

On the gold front, it rose another 0.4% from 4.30pm yesterday and is trading around the US$1435/oz level; this should ensure gold names remain well bid.

Elsewhere, the industrial (0.5%) and consumer discretionary (0.5%) sectors were well supported as the likes of Caterpillar, General Electric and 3M were all higher by more than 0.4%

In summary, it looks like we’re in for a fairly mixed day’s trade as likely strength among energy and materials names are offset by expected softness in the financial sector. On the economic calendar, the latest reading on building approvals and the trade balance will be front and centre of traders’ minds. Following a strong building approvals number last month, the market is expecting a decline of 3.1% for today’s figure.

Turning to currencies and it was another night of US dollar selling, with the world’s reserve currency moving lower against all G10 pairs, with the exception of the Kiwi dollar. Notably, Scandinavian currencies were the standout given their leverage to oil which has pushed up above $102/barrel.

One pair in focus and a possible trading opportunity is the EURUSD. The Euro has been pushing higher on the premise that Trichet will follow other ECB members and acknowledge near term inflation worries. Overnight, the pair reached a high of 1.3891; if tonight’s ECB press conference shows that the central bank are concerned about input costs then we could easily see the Euro push up to 1.40 On the flipside and given the heightened expectations, any indication from Trichet that suggests the spike in oil and food costs are temporary could see a sharp decline.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0166 0.0072 0.71%
ASX (cash) 4806 2 0.05%
US DOW (cash) 12055 53 0.44%
US S&P (cash) 1307.0 9 0.66%
UK FTSE (cash) 5908 37 0.63%
German DAX (cash) 7181 23 0.32%
Japan 225 (cash) 10510 -8 -0.07%
Rio Tinto Plc (London) 42.47 -0.47 -1.11%
BHP Billiton Plc (London) 24.31 0.04 0.14%
BHP Billiton Ltd. ADR (US) (AUD) 46.45 0.40 0.86%
US Light Crude Oil (Apr) 102.41 2.29 2.29%
Gold (spot) 1435.1 5.17 0.36%
Aluminium (London) 2592.00 -7 -0.27%
Copper (London) 9868.00 32 0.33%
Nickel (London) 28600.00 -201 -0.70%
Zinc (London) 2495.00 2 0.08%
RBA Cash Rate to be raised by 25bp (Apr) (%) 9.00 0 0.00%

© Scoop Media