IG Markets - Morning Prices April 12

In US trade, markets enjoyed a relief rally after Spanish and Italian 10-year bond yields eased. Comments suggesting the ECB may revive its bond buying program helped Spanish bonds rise. Investors also responded well to Alcoa’s results which beat estimates on the previous day.

Among the major averages, the Dow Jones Industrial Average was up 0.7% at 12805. The S&P was 0.7% higher at 1369, while the NASDAQ climbed 0.8% to finish at 3016.

The forex market was in consolidation mode for the most part, as risk currencies ended the day a bit higher against the USD and the JPY. With a mild improvement in risk appetite, we expect to see cyclicals attract some buying today, after yesterday’s poor performance. Although commodities were relatively mixed, we expect to see resources open in positive territory, with BHP’s ADR pointing to a 0.2% gain at the open to $3366. Alumina could get a lift after a positive reaction to Alcoa’s result. AWC received fully franked dividends of US$26 million from the AWAC joint venture for the quarter.

Ahead of the open, we are calling the Aussie market up 0.3% at 4257. On the economic front, today we have MI inflation expectations, employment change and unemployment rate numbers due out. Analysts are looking for an unemployment rate of 5.3% and 6700 jobs added. It will be interesting to see how the market reacts to these should they not be in-line with expectations. If we get a stronger-than-anticipated number, investors will be looking to see if this changes expectations of a rate cut. However, we doubt these numbers will change the possibility of a cut, as the RBA has already flagged the CPI numbers as the key indicator this month. As a result, any positive reaction in the Aussie dollar might be used by traders as a selling opportunity. We also have plenty of data due out in China, with new loans and M2 money supply numbers to look out for.

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