Morning thoughts and opening prices 27/3/12

In US trade, markets rallied after US Fed Chairman Ben Bernanke signalled the central bank is committed to the current policy setting. The Fed chief said accommodative policy is still needed to keep the recovery going. On the European front, investors speculated that Germany will back plans for the temporary and permanent euro-area rescue funds to run in parallel.

Among the major averages, the Dow Jones Industrial Average was up 1.2% at 13242. The S&P was 1.4% higher at 1417 and the NASDAQ surged 1.8% to finish at 3123.

Markets were broadly risk-on following Bernanke’s comments as the US dollar was sold off while commodities and risk currencies rallied. Gold was one of the most notable gainers, bouncing over 2% higher after recent weakness. Copper also posted solid gains being highly leveraged to the economic recovery. BHP’s ADR is pointing to a 0.8% rise at the open. We expect to see gains across the resource space today with gold miners outperforming after having been heavily sold off recently.

Ahead of the open, we are calling the Aussie market up 1.3% at 4318. This is right at this year’s highs for the local market and might pose some resistance for the bulls. Should the market retreat from that level, it could find some stability at around the 4300 level. A strong Aussie dollar might cap the upside potential for the market today after AUD/USD rallied back above 1.05 overnight. Locally, there is nothing on the economic front to look out for but RBA Assistant Governor Debelle is set to speak. Investors will be looking for any hints as to what might happen with interest rates next week.

In company news, Stockland shares are likely to come under pressure after the company downgraded its earnings guidance for the 2012 financial year from 31.6 cents per share to 30.5 cents per share. JP Morgan has a 31.1 cps FY12 EPS forecast for SGP and we are likely to see brokers trim their already conservative valuation estimates. Nufarm will also be in focus after its first half profit jumped to $18 million (from $4.4 million).

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.

Please contact IG Markets if you require market commentary or the latest dealing price.

ENDS

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