IG Markets Morning Prices 25/3/11

On Wall Street overnight, stocks continued their push higher, choosing to shrug off the persistent global concerns and instead focus on the improving economic situation in the US, strong company earnings and growth prospects. Markets also chose to focus on the solid jobless claims rather than the weaker-than-expected core durable goods orders.

The tech-heavy NASDAQ was the best performer, rising 1.4%. The S&P 500 added 0.9% while the Dow Jones Industrial Average could only manage a gain of 0.7%.

Domestically, the ASX 200 is called to open the session 0.6% higher at 4729 following the bullish overnight leads from Wall Street. Gains were broad-based with the consumer discretionary, technology and industrial sectors among the best performers; they rose 1.5%, 1.6% and 1% respectively.

Caterpillar, the industrial giant was one of the standouts, rising 1.5% after it announced it would invest $5 billion to expand its production capacity. The maker of heavy equipment is seen as a barometer of economic activity, so this is an encouraging sign.

So we should see some support among the above sectors, as well as from the materials (0.4%), energy (0.4%) and financials (0.5%). Materials leads were pretty positive with base metals mostly firmer in London Metals Exchange trade. In London, Rio Tinto and BHP Billiton surged 2.5% and 1.4% respectively. However, BHP Billiton’s ADR is only calling the locally-listed stock flat at $44.71 on the open. Once again, this looks a little cautious, with the risk to the upside.

In summary, it looks likely to be a strong end to the trading week as investors continue to put money to work among equities beaten down by last week’s sell off. Having said that, the local market is 1.6% higher for the week, so there is always the chance for some end-of-week profit taking heading into the weekend.

Turning to the currency market and it was the commodity currencies turn to shine overnight, with the NZD and AUD pushing higher over the session. The AUDUSD traded off a session low of 1.0113 to reach a high of 1.0229, not far from breaking the all time record of 1.0256. A rise in risk appetite across global markets inspired buying in the currency and we believe if equities and commodities continue to trend higher, a break of this level in the short term is certainly possible.

The Euro had many reasons to sell off overnight but couldn’t as the bulls won the battle, pushing the currency from a low of 1.4054 to a high of 1.4222. However, as seen during previous sessions strong resistance was seen above the 1.42 level. Whilst many are speculating that Portugal will be next on the list to receive an EU bailout, possibly as much as EUR70 billion, it doesn’t seem to be viewed as a systematic risk.
Interestingly, whilst Portuguese and Irish yields have been pushing higher Spanish yields have remained relatively flat; if the market feels Spain has its fiscal issues under control, the Euro may continue to grind higher in the short term. A bailout of Portugal could perhaps bring an end to this whole European crisis.

Market / Price at 7:30am AEST / Change Since Australian Market Close / Percentage Change
AUD/USD / 1.0207 / 0.0078 / 0.77%
ASX (cash) / 4729 / 29 / 0.62%
US DOW (cash) / 12173 / 98 / 0.81%
US S&P (cash) / 1309.3 / 14 / 1.07%
UK FTSE (cash) / 5897 / 99 / 1.71%
German DAX (cash) / 6951 / 143 / 2.10%
Japan 225 (cash) / 9596 / 139 / 1.46%
Rio Tinto Plc (London) / 42.32 / 1.04 / 2.51%
BHP Billiton Plc (London) / 23.58 / 0.33 / 1.42%
BHP Billiton Ltd. ADR (US) (AUD) / 44.71 / 0.00 / -0.01%
US Light Crude Oil (May) / 105.43 / 0.01 / 0.00%
Gold (spot) / 1430.2 / -8.00 / -0.56%
Aluminium (London) / 2623.00 / -6 / -0.23%
Copper (London) / 9702.00 / 7 / 0.07%
Nickel (London) / 26940.00 / 223 / 0.83%
Zinc (London) / 2415.00 / 10 / 0.42%
RBA Cash Rate to be raised by 25bp (Apr) (%) / 5.00 / 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.

Please contact IG Markets if you require market commentary or the latest dealing price.

ENDS

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