IG Markets opening calls

IG Markets opening calls

US traders continued to search out positives in the market, as an improving US economy signalled Q4 GDP should be above 3%.

Among the major averages, the Dow Jones Industrial Average gained a third day to close at 12160 up 0.5%. The S&P climbed 0.8% to 1254, whilst the NASDAQ rallied 0.8% to close at 2266.

While you probably can’t read too much into price action this time of year, especially as volume was terrible (as you would expect), one has to be impressed that the bulls were in charge the whole way through trade. It is certainly the sign of a healthy market when you see the chart start at the bottom left and finish at the top right. It would be nice to witness that on the ASX 200, as all too often we see the index open in-line with overnight leads only to drift lower into afternoon trade. Interestingly, the S&P 500 is continuing to trade above its 50-day moving average and is making a new push to re-claim the illusive 200-day moving average which, since falling below in August, has capped gains with only two closes (October 27 and 28) above this level in effectively 101 trading sessions. It will certainly be an interesting week next week, because if we get a few days where the index closes above this level, it will almost certainly encourage a few of the bears to cover shorts.

The US economy is perhaps the shining light in what is arguably a deteriorating picture in most developed economies, and last night again was a case in point. The 3Q GDP print was revised down to 1.8% from 2%; however this is a backwards looking indicator, so of more importance was the improvement in leading indicators, University of Michigan consumer confidence survey and weekly jobless claims. Weekly jobless claims improved by 2000 less claimants, but also easily beat forecast, and is now showing a huge divergence between this data point and the monthly payroll survey, with some analysts now suggesting we should see a 200,000+ non-farm payroll print for December.

While equities were strong, it seems forex traders remained sidelined, with the USD remaining higher against nine out of ten G10 currencies, keeping pressure on commodity prices. The overriding sense is that the extra liquidity provided by the ECB at yesterday’s three-year tender (a form of passive QE) has increased its balance sheet to a record level of £ 2.748 billion, which should keep EUR/USD under pressure into 2012.

All-in-all we end the week on what looks like a positive note; our opening call of 4131 suggests a gain of nearly 1% on the open. BHP’s ADR is signalling a 1.2% gain, with financials looking to be supported by strong moves in its global banking peers.

There is no real economic data to focus on, however on the stock side, keep an eye on retailers, which, given the positive open expected , should see a few shorts closing out. However, it seems that Goldman Sachs will keep a lid on any optimism, as it has cut Myer to hold (from buy) and David Jones to sell (from hold), while Credit Suisse has cut Myer’s price target to $2.80 from $3.25 to reflect downside risks to its 2012 guidance.

Also keep an eye on OneSteel, who had a stellar day yesterday with speculation in Korean publication MoneyToday that Posco may make a play for them, although Posco denied this.

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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