IG Markets - Morning Prices Dec 13

US and European markets were sold off overnight after ratings agencies said the summit did little to switch their views on Europe’s struggling governments. Moody’s and Fitch feel there is still significant pressure on euro-area nations’ debt ratings, after leaders failed to come up with a comprehensive solution to deal with the region’s debt crisis. However, there were some bright spots with a fairly positive reaction to the Italian bond auction. The reasonably good response to the auction is positive ahead of the supply coming into the bond market this week.

Among the major averages the Dow Jones Industrial Average lost 1.3% to 12022. The S&P declined 1.5% to 1236 and the NASDAQ shed 1.3% to 2612. Intel weighed on tech companies after cutting its fourth-quarter revenue forecast.

Following the comments from Moody’s and Fitch, we expect to hear from S&P again soon for some post-summit comments. We already know S&P has France on ratings watch and may strip it of its AAA credit rating.

Risk assets fell sharply with big falls in the commodities and currencies space. Oil slipped around 1.5%, while copper declined 2.9% and silver shed 3.9%. As a result, we expect to see significant pressure on the resource stocks today, with BHP Billiton’s ADR indicating a 1.3% drop. It was a similar story in the currency space, with the euro approaching its one-year low against the greenback and AUD/USD back near parity once again.

On the economic front, traders will be looking out for NAB business confidence and housing starts numbers. Traders will also be eyeing China new loans and M2 money supply numbers over the next couple of days. Following last night’s sell-off, we are calling the Aussie market down 1.5% at 4188.

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