IG Markets - Morning thoughts and opening prices

Good morning,

In US trade, markets declined amid another round of disappointing economic data. Global growth concerns are increasingly becoming an issue, with US data starting to turn negative Weaker-than-expected US services ISM and disappointment that the ECB continues to warn of downside risks weighed on markets.

Among the major averages, the Dow Jones Industrial Average was down 0.5% at 13207. The S&P was 0.8% lower at 1402, while the NASDAQ added 0.3% to finish at 3060.

Key commodities and commodity currencies sold off due to rising global growth concerns, with oil dropping around 2%. BHP’s ADR is pointing to a 1.4% fall to $35.76. We are likely to see similar losses in the other resource plays. The decline in risk appetite will see most of the cyclical stocks struggle. Money is likely to flow into the high yielding stocks today, and perhaps some of the more defensive sectors. With a key economic reading, US non-farm payroll data, due out in the US session later today, we are likely to see investors exercise some caution going into the end of the week. Borrowers will also be looking out for Westpac’s interest rate decision, which it said it will announce today.

Ahead of the open, we are calling the Aussie market down 0.3% at 4415. As a result, we could see some key support levels today, with 4400 being the obvious near-term support. The Aussie dollar will be in focus today after AUD/USD dipped below 1.03 and printed a low of 1.02396. Although the pair has recovered to 1.0264 this morning, traders are likely to target 1.03 as a key sell level. Selling into strength seems to be the favoured strategy for AUD/USD at the moment. The RBA releases its monetary policy statement, which might give more hints on the its stance going forward. Many analysts feel the RBA is likely to remain fairly dovish, and this might continue to see the Aussie dollar trade heavy.

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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