IG Markets - morning thoughts and opening prices

IG Markets - morning thoughts and opening prices

In US trade, markets rallied on the back of Premier Wen Jiabao’s pledge to promote growth, plus hopes that Europe will take stronger action to aid growth and keep Greece in the EU. On the Greece front, confirmation that the Democratic Alliance Party will join forces with the New Democracy for the election also offered some support, particularly for the euro. As a result, we saw risk assets perform well, while safe-haven assets retreated. The buoyant mood in risk currencies suggests risk assets in the Asian region will enjoy a day in the sun for a change.

Among the major averages, the Dow Jones Industrial Average was up 1.1% at 12504. The S&P was 1.6% higher at 1316, while the NASDAQ climbed 2.5% to close at 2847.

The risk recovery saw commodities surge, with big gains for copper and oil. As a result, resource stocks will be looking to build on yesterday’s gains at the open. BHP’s ADR is pointing to a 1.3% rise to $32.52. Unfortunately, gold’s run stalled, with the precious metal struggling near the $1600 level. As a result, gold stocks are likely to underperform today. The risk space may get a lift from the improved sentiment, with gains across the industrial, financial and consumer discretionary sectors expected. However, the recovery in the Aussie dollar might cap gains. With the US dollar taking a breather, some of the healthcare stocks with high currency exposure like CSL Limited and Cochclear might struggle today.

Ahead of the open, we are calling the Aussie market up 0.8% at 4105. After yesterday’s gains, it is not surprising to see the local market facing a modest gain compared to its US peers. We might see a relief rally early on, with some investors piling back in to take advantage of the recent share price slump. However, on days like this, we generally see the euphoria wane and markets fade through the session. Traders are more likely to continue selling into strength as the market tests some resistance levels on the way up. On the economic front, there is nothing to look out for today. The next key event risk for markets will be the EU Summit on Wednesday.

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.

www.igmarkets.com.au

ENDS

© Scoop Media