IG Markets - morning thoughts and opening prices

IG Markets - morning thoughts and opening prices

Overnight, US markets edged modestly higher as European leaders met to discuss the region’s continuing debt crisis, with attention also focussed on the onset of the US Q4 reporting season.

Among the major averages, the Dow Jones Industrial Average added 0.25% to close at 12392, the S&P jumped 0.25% to 1280, while the NASDAQ edged 0.1% higher to end at 2676.Among the major S&P sectors, energy, industrial and financial names were all firmer, while materials stocks finished marginally weaker.

Last night was really a bit of a ‘nothing’ session in the US, with stocks idling along in a narrow trading range in anticipation of Alcoa’s result; after the bell Alcoa reported a 3 cent per share loss, which was in line with expectations.

Quarterly growth expectations for S&P 500 companies have been wound back from 14% to 6% over the last few months, with much of the attention of the analyst community likely to be focussed on how the slowdown in Europe in particular, and to a lesser degree, emerging markets, will impact revenue projections.

Investors are also looking to this earnings season as a potential catalyst to drive stocks higher and beyond their recent trading ranges. While many market commentators see equities as cheap on a fundamental basis, the market is not trading on fundamentals but rather is still being dictated to by issues emanating out of Europe. While expectations for earnings season have been pared back, many are still hopeful that growth levels and forward projections are enough to convince the ‘sidelined money’ that stocks are cheap and worth buying at these levels.

As has been well documented, recent US economic data has been better than expected and pointing to signs of a gradually improving US economy. Last night we saw US consumer credit in November increase by $20.3 billion, the biggest gain since 2001 and well ahead of forecast of $7 billion; surely this is another indication that US consumers are feeling a bit better about the economy and its prospects.

Turning to the local market, the ASX 200 is set to open marginally firmer today, with the benchmark index called to unwind 13 points or 0.3% higher at 4118. US sector leads may again be a bit misleading today. While the US session saw the materials sector marginally lower, BHP’s ADR is suggesting the local stock will open 31 cents or 0.9% higher at $35.51, which should bode well for our heavily-weighted mining sector. We also saw US financials record a gain of 0.5%, which should offer some support to our major banks that were sold off yesterday.

Also worth watching this morning is Australian building approvals data due out at 11.30am, which are expected to have jumped 6.6%.

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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