IG Markets - Morning thoughts and opening prices 20 Apr 2012

Good morning,

In US trade, markets declined on the back of some disappointing economic data. Unemployment claims, existing home sales and Philly Fed manufacturing data all missed expectations. Over in Europe, Spain successfully sold €2.5 billion worth of bonds, but had to pay a high price in the 10-year period. However, any positive reaction to Spain and France bond auctions was quashed by rumours that France was going to be downgraded.

Among the major averages, the Dow Jones Industrial Average was down 0.5% at 12964. The S&P was 0.6% lower at 1377, while the NASDAQ shed 0.8% to finish at 3008.

Risk assets did not experience the relief rally that was expected following the relatively successful eurozone bond auctions. Commodities were relatively flat after losing the momentum they picked up from whispers about China monetary easing. BHP’s ADR is pointing to a 0.5% fall at the open to $35.32. We expect to see similar moves in the other resource majors at the open. Boral shares might come under pressure today after it downgraded its full-year earnings guidance by $20 million.

Ahead of the open, we are calling the Aussie market flat at 4362. After the move higher we have seen this week, we wouldn’t be surprised if the market goes through some quiet consolidation today. On the local economic front, we have import prices data due out today. Despite the falls seen in US markets, earnings posted in US trade were actually mostly positive. An impressive earnings report for Morgan Stanley could lift investment group Macquarie. Traders will be eyeing the key $30 level for MQG. The Aussie dollar showed little reaction to Prime Minister Gillard’s comments, noting that fiscal restraint on the part of the government would make room for the RBA to cut rates. Elsewhere in the region, USD/JPY extended its gains overnight and this is likely to support the Nikkei.

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.

Kind regards,
Stan Shamu
Market Strategist
IG Markets
www.igmarkets.com.au

ENDS

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