IG Markets: Morning Thoughts

IG Markets: Morning Thoughts

In US trade, markets declined in a choppy session, which saw some traders exit positions ahead of what was potentially a key event risk weekend. After a further escalation in risk aversion in Asia on Friday, markets stabilised in Europe, though there were limited fundamental drivers behind the moves. The Facebook IPO was perhaps the biggest story of the day, with the company largely disappointing on its first day.

Among the major averages, the Dow Jones Industrial Average was down 0.6% at 12369. The S&P was 0.7% lower at 1295, while the NASDAQ shed 1.2% to close at 2779.

In the commodities space, gold was the highlight yet again, as the precious metal rallied around 1.2%. As a result, we could see the gold miners outperform today, just like what they did on Friday. We also saw a reversal in other key commodities like copper, which managed to finish the session a touch higher. With a mild improvement in the metals space, BHP’s ADR is pointing to a 1% gain to $31.76. The resource space was violently sold off last week, and we wouldn’t be surprised to see some bargain hunting in the sector. News that Chinese Premier Wen Jiabao vowed proactive policies to make growth a bigger priority might also go a long way towards lifting resources. Some of the coal stocks are in for an interesting session after the Queensland government withdrew its support for a $9 billion coal post expansion. James Hardie will be one to watch after posting its FY results which were slightly ahead of consensus and saying it expects the housing market to rise slightly in FY13.

Ahead of the open, we are calling the Aussie market up 0.1% at 4048. Friday’s low was 4026.5, and this level will be near-term support should the market fail to hang on to the early gains. On the economic front, there is nothing to look out for today. However, Greece will remain a major talking point and reports that German Chancellor Angela Merkel told Greek President Papoulias that Greece should hold a referendum on whether it wants to stay in the eurozone could influence the polls. A positive development from the G8 summit was that leaders are in favour of boosting growth in the eurozone to balance austerity, and reaffirmed their interest in keeping Greece in the eurozone. However, there isn’t a clear plan as to how the aim to achieve these goals.

Market

Price at 6:30am AEST

Change Since Australian Market Close

Percentage Change

AUD/USD

0.9837

0.0017

0.17%

ASX (cash)

4048

2

0.06%

US DOW (cash)

12377

-25

-0.20%

US S&P (cash)

1294.6

-6.4

-0.49%

UK FTSE (cash)

5231

-13

-0.26%

German DAX (cash)

6214

-85

-1.35%

Japan 225 (cash)

8547

-64

-0.74%

Rio Tinto Plc (London)

27.88

-0.67

-2.34%

BHP Billiton Plc (London)

17.05

-0.22

-1.25%

BHP Billiton Ltd. ADR (US) (AUD)

31.76

0.30

0.96%

US Light Crude Oil (June)

91.65

-0.39

-0.42%

Gold (spot)

1592.5

21.5

1.37%

Aluminium (London)

2068

14

0.68%

Copper (London)

7650

1

0.01%

Nickel (London)

16825

-370

-2.15%

Zinc (London)

1894

-6

-0.32%

ends

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