IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Overnight European and US equities enjoyed a mild reprieve finishing flat to modestly higher, despite the ongoing financial crisis engulfing Europe. However, most commentators saw last night’s performance as nothing more than a brief period of respite, predicting a northern hemisphere summer characterised by unconvincing, range-bound trade until European and US economies find firmer footing and clearer direction.

During the session, Art Hogan, chief market strategist at Lazard Capital Markets in New York made some comments that pretty much captured the mood of the broader market and will no doubt resonate with many. They were as follows:

'The market seems to vacillate between cynicism and optimism over what European leaders can get done. The totality of our focus continues to be on Europe and their ability to claw their way out of the hole they've dug,"… "While we're waiting for that to happen, we see lacklustre volume and relatively sideways action."

On commenting on the daily wild swings, Hogan said even a buy-on-dip strategy is proving difficult to get right. ’It's really hard to justify, unless you're a minute-by-minute investor, to look at this market and say there are great opportunities created by the downdrafts.’ ’Sometimes the sidelines is the best place to be.’

With US markets finishing on a positive note into the close, we’re expecting a marginally higher open in Australia today, with the ASX 200 set to unwind approximately 12 points or 0.3% firmer at 4025. With the dollar weakening overnight and anxiety levels ahead of the EU summit abating momentarily, there was some marginal money flow back into risk asset classes. The AUD was slightly firmer, as was crude oil, but another disappointing performance across the base metals complex suggests sentiment still remains weak. It is likely to be another grinding day, this time with a possible upside bias.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0064 0.0030 0.30%
ASX (cash) 4025 12 0.29%
US DOW (cash) 12553 22 0.18%
US S&P (cash) 1319.7 5.6 0.43%
UK FTSE (cash) 5473 11 0.19%
German DAX (cash) 6170 10 0.16%
Japan 225 (cash) 8685 21 0.24%
Rio Tinto Plc (London) 28.90 0.18 0.62%
BHP Billiton Plc (London) 17.24 -0.02 -0.13%
BHP Billiton Ltd. ADR (US) (AUD) 30.63 0.00 0.00%
US Light Crude Oil (August) 79.38 0.23 0.30%
Gold (spot) 1573.2 -10.2 -0.65%
Aluminium (London) 1848 -8 -0.43%
Copper (London) 7356 4 0.06%
Nickel (London) 16300 -146 -0.88%
Zinc (London) 1771 -24 -1.36%

www.igmarkets.com.au

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