IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Another day, another bout of global jitters about the state of the European Union. Overnight we saw equities on both sides of the Atlantic sold off heavily on increasing scepticism that this week’s EU summit will fail to come up with any meaningful measures to shore up the prospects of the EU’s weakest nations. News over the weekend that Greece’s newly elected Prime Minister, Antonis Samaras, and his finance minister (resigned) will both be absent due to health issues acerbated fears that the meeting would become nothing more than a fruitless talk-fest.

The sharp falls across European and US equities again sets up the local market for a depressing day, with the ASX 200 called to open below the 4000-point level, down approximately 35 points or 0.85% at 3993. While weakness is expected on the open, the real interest will be how the market responds. Yesterday, the market fell from 4048 to a low of 3993, a drop of more than 1.3%, before paring most of its losses to close down 0.5% at 4027. Despite the ongoing European concerns and the prevalence of tax-loss selling, there seemed to be reasonable buying interest below 4000. It will be intriguing to see if that same thematic plays out today.

That said, early losses are expected to be broad based with the materials, energy and financial sectors likely to pace the declines. The deterioration in global sentiment saw investors rushing into safe-haven asset classes, namely the USD and gold, the latter of which managed to rally $12 or 0.8% overnight to $1584. On days and periods such as these there are generally not too many places to hide. Gold could be one of them, at least until the conclusion of the EU summit and the beginning of the new financial year.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0006 -0.0029 -0.28%
ASX (cash) 3993 -35 -0.86%
US DOW (cash) 12504 -144 -1.14%
US S&P (cash) 1309.6 -16.0 -1.21%
UK FTSE (cash) 5437 -77 -1.40%
German DAX (cash) 6129 -131 -2.10%
Japan 225 (cash) 8633 -102 -1.17%
Rio Tinto Plc (London) 28.74 -1.08 -3.63%
BHP Billiton Plc (London) 17.26 -0.44 -2.49%
BHP Billiton Ltd. ADR (US) (AUD) 30.62 -0.45 -1.44%
US Light Crude Oil (August) 79.31 -0.84 -1.05%
Gold (spot) 1584.6 12.0 0.76%
Aluminium (London) 1867.25 -9 -0.47%
Copper (London) 7386.25 2 0.02%
Nickel (London) 16411.5 -229 -1.38%
Zinc (London) 1799.5 -36 -1.96%

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.

www.igmarkets.com.au

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