IG Markets - Morning thoughts and opening prices

Good morning,

In US trade, markets came off their lows after the EFSF confirmed it will release some funds to Greece today. We had seen markets trade ‘risk-off’ on the back of Greece’s ongoing political uncertainty, and concern grew that Spanish banks are underfunded. Spain’s IBEX was the hardest hit with a 2.8% drop.

Among the major averages, the Dow Jones Industrial Average was softer by 0.8% at 12835. The S&P was 0.7% lower at 1355 and the NASDAQ shed 0.4% to finish at 2935.

Key commodities were down sharply at one stage during the European session, with gold the main culprit. However, we saw risk assets pare losses on reports that Greece would likely receive a €4.2 billion payment from the EFSF later today, and this positive momentum looks like it might feed into equities. Once again, gold/copper stocks will get a lot of attention following the big swings we have been seeing in the metals. BHP’s ADR is pointing to a 0.4% gain to $34.48. The Aussie dollar continued its slide, with AUD/USD printing a low of 1.00211 before recovering in-line with other risk assets. The pair continues to edge closer to parity and this could happen as early as today, with some key economic releases on the calendar likely to cause some volatility. The preferred strategy remains selling into strength as the path of least resistance is currently down.

Ahead of the open, we are calling the Aussie market down 0.4% at 4258. This is right at yesterday’s low, which leaves the market extremely vulnerable. The 4250 zone is a key support region, and investors will be hoping the bulls can defend these levels. Although we saw a recovery in sentiment late in US trade, Greek fears and worries of a funding crunch are likely to keep investors at bay. On the economic front, the rest of this week promises to be quite a spectacle with China trade balance, new loans and M2 money supply data due out. Locally, today we have jobs numbers due out at 11.30am, with unemployment expected to rise to 5.3%, with around 5,000 jobs lost. This is the first time we’ve had a consensus jobs lost in nearly three years. In its budget, the government projected unemployment to rise to 5.5% in the next two years, while core inflation is expected to be 2.75% in the next year.

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

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