Morning thoughts and opening prices

Good morning,

In US trade, markets were mostly weaker, as mixed data saw investors remain cautious. US existing home sales slightly missed consensus, though an upward revision to January offset some of the February disappointment. Fed chief Ben Bernanke warned higher energy prices will probably slow growth in the short term. There are also renewed fears about Spain with spreads blowing out considerably this month, especially against Italy.

Among the major averages, the Dow Jones Industrial Average was down 0.4% at 13125. The S&P was 0.2% lower at 1403 and the NASDAQ rose a point to finish at 3075.

AUD/USD took another leg lower as the US dollar gained ground against most of the majors. With the AUD struggling, we could see some much needed relief for currency-sensitive stocks. The strong USD also impacted the commodity space, with most metals declining. BHP’s ADR is pointing to a 0.5% drop at the open. However, oil jumped above $107 a barrel after inventories unexpectedly declined, and this is likely to keep pressure on equities.

Ahead of the open, we are calling the Aussie market down 0.2% at 4244. With China bears looming, today’s focus will be on the release of HSBC's preliminary China PMI. This could be a key event risk driver. Locally, there is nothing major on the economic front to look out for. We are likely to see the brokers start reacting to the David Jones announcement from yesterday. The stock will remain in focus as analysts dissect the result and strategy, and how it might affect its valuation going forward. Deutsche Bank downgraded the stock to Sell (from Hold) citing flat earnings outlook and execution risk as the main issues. DJS’ announcement will also bring peers like Myer into the fore, as it is likely that its facing similar challenges to DJS.

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.

www.igmarkets.com.au

ENDS

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