IG Markets - Morning thoughts and opening prices

Good morning,

Risk currencies reversed their gains versus the dollar in Europe, as a report from the news agency Xinhua quashed expectations of fresh large-scale stimulus from China. The Asian session had seen risk assets get a lift on increasing optimism of policy action by Chinese officials Domestic reports had circulated, suggesting that new stimulus measures were being discussed. Some are attributing the drop in the euro to Egan-Jones cutting Spain’s credit rating. There are also reports suggesting the ECB has rejected Spain's plan to finance the recapitalisation of its banking sector via the direct injection of sovereign bonds. US markets returned to trade on a positive note with some solid gains across the board. However, there was some disappointing economic data as consumer confidence missed expectations.

Ahead of the open, we are calling the Aussie market down 0.2% at 4107, despite the rally seen in US markets. After yesterday’s big move higher in the local market, in the absence of any fresh positive leads the negative call is not surprising. Additionally, commodities had a fairly tough session and this might knock the wind out of the resource stocks’ sails today. Oil prices fell for the first time in three days. On the economic front, we have April retail sales and construction work data due out at 11.30am. Retail sales are expected to have gained 0.2% and construction work done is expected to be up 3.1%. Elsewhere in the region, we have Japan manufacturing PMI, and BoJ Governor Shirakawa is expected to speak. This might have some bearing on the yen today.

On a stock level, we expect a relatively firm start for BHP, with its ADR pointing to a 0.4% rise to $32.49. Wesfarmers has an investors briefing day where we can expect to get some comments on its many business divisions including Coles, Bunnings, Officeworks and coal. With April retail sales data due out, the retailers will be in focus today. CSL Limited will be one to watch after a biologics license application for 4-factor PCC for urgent reversal of warfarin effects during bleeding emergencies was accepted for review by FDA. Programmed Maintenance is also one to watch, after posting solid FY12 earnings growth and projecting moderate earnings growth in FY13.

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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