IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Risk assets showed initial support to the Spanish bailout yesterday with equity markets starting the week off on a strong note. The sharp move higher lost steam in the European session however and risk assets pared some of their gains. It is reassuring that concrete steps are now being taken to address the banking system's capital shortfall. However, there is still some scepticism as any external funds provided will still lead to an increase in Spain's debt-to-GDP ratio. The euphoria also waned as the reality that Spain needs to be rescued escalated fears that the Eurozone sovereign debt crisis could deepen. After testing parity against the greenback yesterday, the Aussie dollar has retreated quite sharply and is currently trading at around 0.9864. The pair seems to have a support base at around 0.98 and this level is likely to hold in the near term.

Ahead of the open, we are calling the Aussie market down 0.1% at 4061. Although this figure is little changed from Friday’s close, it is quite disappointing considering the significant rally experienced by other markets in the region yesterday. However, a positive from the situation is that we missed out on some of the volatility which could have seen some short positions taken out in the equities space. We wouldn’t be surprised to see the local market play catch up today, particularly in the resource space. The positive China economic data from the weekend could encourage investors to go on the hunt for beaten down resource names. On the local economic front, we only have NAB business confidence on the calendar today.
2.
On a stock level, we expect a weak start for BHP Billiton, with its ADR pointing to a 1.2% fall to $31.52. Aquarius Platinum will be one to watch today after its London and Johannesburg listed shares plunged following the closure of a mine. Ten Networks returns to trading today after completing institutional entitlement offer. The stock got some unfavourable ratings and broker commentary following the trading update and we could see it come under pressure today All the big banks have now announced their rate cuts following last week’s RBA rate cut. ANZ Bank was the standout, passing on the whole amount (25 basis points).

Market Price at 6:30am AEST Change Since Australian Market Close
(Friday 8th June) Percentage Change
AUD/USD 0.9873 0.0023 0.24%
ASX (cash) 4061 -3 -0.07%
US DOW (cash) 12371 -29 -0.23%
US S&P (cash) 1304.7 -1.3 -0.10%
UK FTSE (cash) 5394 15 0.28%
German DAX (cash) 6091 44 0.73%
Japan 225 (cash) 8479 20 0.24%
Rio Tinto Plc (London) 28.52 -1.63 -5.41%
BHP Billiton Plc (London) 17.66 -0.54 -2.98%
BHP Billiton Ltd. ADR (US) (AUD) 31.52 -0.39 -1.23%
US Light Crude Oil (July) 81.59 -1.26 -1.51%
Gold (spot) 1597.6 27.6 1.76%
Aluminium (London) 1975 65 3.38%
Copper (London) 7408 -87 -1.17%
Nickel (London) 17248 653 3.93%
Zinc (London) 1910 1 0.05%

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