IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Risk currencies have gapped higher this morning as projections showed Greece’s two largest pro-bailout parties winning enough seats to forge a parliamentary majority. Anti-bailout party Syriza received 26.6% and 71 seats. The euro raced to a high of 1.2747 against the greenback, while the Aussie dollar advanced to 1.01327 against the USD. With the euro taking the election results positively ahead, Asian markets are in for a firm open. As well as listening for political commentary in Greece, investors are likely to keep one eye on the G20 meeting.

Ahead of the open, we are calling the Aussie market up 1.6% at 4122. This would see it nudge through resistance, which held it back from a meaningful recovery over the past few weeks. The Greece election news is likely to shore up risk assets across the Asian region today and lure in some cash which had been on the sidelines ahead of the elections. The question now is how long will the euphoria last and what are the key events to look out for going forward. New Democracy and PASOK together are likely to have sufficient numbers to form a coalition government. Whether such a government will ultimately be formed is another matter, and it seems days of tortuous negotiation still lie ahead. On the economic front, today we have new motor vehicle sales. However, this is not a major market event.

On a stock level, we expect a strong start for BHP Billiton, with its ADR pointing to a 0.9% rise to $32.11. However, we could see further upside to this call given the improvement in risk appetite. Gold stocks may underperform today as the precious metal lost its safe-haven appeal and slumped this morning. Fairfax (FXJ) will be one to watch yet again on reports Gina Rinehart may have increased her stake in the company to 18%. FXJ is also reported to have sold a block of shares in New Zealand company Trade Me Group to a small number of investors. Leighton Holdings might get a lift after saying the value of its Gorgon project contract has grown to $1.85 billion.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0121 0.0104 1.04%
ASX (cash) 4122 64 1.59%
US DOW (cash) 12846 179 1.41%
US S&P (cash) 1350.8 20.0 1.50%
UK FTSE (cash) 5597 102 1.85%
German DAX (cash) 6393 226 3.66%
Japan 225 (cash) 8721 152 1.77%
Rio Tinto Plc (London) 29.33 0.67 2.34%
BHP Billiton Plc (London) 18.00 0.23 1.29%
BHP Billiton Ltd. ADR (US) (AUD) 32.11 0.27 0.86%
US Light Crude Oil (July) 85.27 0.65 0.77%
Gold (spot) 1622.3 -3.2 -0.20%
Aluminium (London) 1933 -21 -1.07%
Copper (London) 7510 90 1.21%
Nickel (London) 16850 215 1.29%
Zinc (London) 1904 12 0.63%

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

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