IG Markets - Morning thoughts and opening prices

Good morning,

In US trade, markets declined amid heightened European growth fears. Disappointing French and German PMIs and a subdued China PMI number all contributed to global growth fears Another source of concern is political uncertainty in France and the Netherlands, which has undermined the future of the EU stability.

Among the major averages, the Dow Jones Industrial Average was down 0.8% at 12927. The S&P was 0.8% lower at 1367, while the NASDAQ shed 1% to finish at 2970. This move saw the S&P break its long-term uptrend support line. European bourses were hit even harder, with the DAX slumping 3.4% and the CAC lost 2.8%.

With fears of a deep European recession, risk assets were sold off, with falls across commodities and risk currencies. This weighed on resource names particularly in the London session. BHP’s ADR is pointing to a 1.3% fall at the open to $34.87. We expect to see similar declines in other big resource names. Newcrest Mining released its March quarterly production report today and saw output affected by high rainfall at Cadia Valley. NCM is under pressure to hold the $27.50 level, with momentum firmly to the downside. The miner has a history of disappointing and seems to have missed guidance yet again. The defensive stocks are likely to outperform in this risk averse environment. Wesfarmers is one to watch with its third quarter retail sales update due out this morning. Once again, Coles will be the key aspect in the report, given it has been responsible for any re-rating in the stock.

Ahead of the open, we are calling the Aussie market down 0.5% at 4332. The downside has been limited by the recovery we saw late in US trade. AUD/USD was sold lower to 1.02717, after being caught up in the risk sell-off. The pair managed to recover in-line with US markets and is back at around 1.032, which is above the 1.03 support level. The Aussie dollar will be in focus today with the quarterly CPI number due out at 11.30am. It is expected to be up 0.7% on quarter following the softer-than-expected PPI yesterday. The market is aggressively pricing in RBA rate cuts, with a May cut almost certain, while a June cut is on the cards. Having such a large bearing on interest rates, a major variation from this figure could result in big moves in the AUD and interest rate sensitive stocks, particularly in the consumer space.

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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