IG Markets - Morning thoughts and opening prices 15/2/12

In US trade, markets lost ground early due to the Moody's downgrades and some uncertainty over whether or not Greece will qualify for the second bailout package from the ‘troika’. A weaker-than-expected headline US retail sales reading also dampened sentiment. A strong recovery at the end of the session saw US markets finish relatively flat and at their highs of the day.

Among the major averages, the Dow Jones Industrial Average was up four points to close at 12878. The S&P was flat at 1351 and the NASDAQ edged a point higher to close at 2932.

The Greece situation took a turn after EU finance ministers cancelled Wednesday’s meeting, which came as chairman of the euro finance panel Jean-Claude Juncker said he was yet to receive the political assurances from Greek lawmakers about the austerity measures. This resulted in some risk aversion, with commodities and risk currencies losing ground. However, we saw a recovery into the close of the US session on reports that Greece will put a guarantee in writing to EU leaders.

The uncertainty drove the US dollar higher overnight and saw risk currencies and commodities decline. As a result, the resource space might be in for a tough start. There are a few key reports in the mining space to look out for, with Fortescue and OZ Minerals set to release results. Analysts expect FMG to report a solid result with production tracking well. Of course, the biggest report of the day is Commonwealth Bank. The bank’s cash earnings rose 7% to $3.576 billion, beating expectations of $3.526 billion. However, its dividend was a slight miss coming in at $1.37 (+0.4%) versus forecasts of $1.41. We had provided a brief preview of what analysts were expecting from the CBA report in yesterday’s afternoon report. CBA’s results will likely dictate trading in the financial space today.

Ahead of the open, we are calling the Aussie market down just three points at 4239. On the economic front, we have Westpac consumer sentiment and new motor vehicle sales data out this morning. However, we feel this will be a side show as the Greece situation heats up and with some big earnings reports due out.

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.

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