IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Friday’s European and US sessions ended on a firmly negative note after the highly anticipated non-farm payrolls report once again disappointed to the downside, adding to concerns over the slowing US economy. Earlier in the week, a stronger-than-expected ADP private sector jobs report had raised expectations that the non-farms figure might reverse a recent trend and surprise to the upside, but it wasn’t to be with the headline number of 80,000 coming in well short of expectations. The unemployment rate remained steady at 8.2%.

The real disappointment in the eyes of the market appeared to be that while the number was a bad one, it was still probably not bad enough to coax the Fed off the fence with further quantitative easing. The result was a stronger USD, weakness across the commodities complex and a further blow to investor sentiment. Unfortunately, despite the recent moves by various central banks to bolster their respective economies, and of European leaders to implement stabilisation initiatives, many investors are of the view that these measures will have little positive impact and that the second half of the year will be much the same as the first - a constant grind with the same issues preventing the market from any material gains.

Looking to today’s session, the local market is set to start the new week in negative territory with the ASX 200 currently called to unwind about 26 points or 0.6% lower at 4132. Losses are likely to be broad based, but led by the materials and energy sectors, with base metals and crude prices sliding on the back of a stronger USD and anti-risk sentiment.

Chinese inflation data due out at 11.30am is expected to reveal that consumer price inflation has dropped below 3% to 2.4%, providing more room for the PBoC to adopt further stimulus measures in addition to last week’s interest rate cut. Expectations of further stimulus measures, particularly from the Fed, are likely to be the key influence of price action this week.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0190 -0.0074 -0.72%
ASX (cash) 4132 -26 -0.61%
US DOW (cash) 12768 -116 -0.90%
US S&P (cash) 1353.1 -11.3 -0.82%
UK FTSE (cash) 5678 -1 -0.01%
German DAX (cash) 6423 -92 -1.42%
Japan 225 (cash) 8985 -35 -0.39%
Rio Tinto Plc (London) 30.69 -0.87 -2.75%
BHP Billiton Plc (London) 18.42 -0.34 -1.83%
BHP Billiton Ltd. ADR (US) (AUD) 31.87 -0.22 -0.69%
US Light Crude Oil (August) 84.13 -2.34 -2.70%
Gold (spot) 1580.2 -24.00 -1.50%
Aluminium (London) 1896 -36.63 -1.90%
Copper (London) 7531 -144 -1.88%
Nickel (London) 16150 -554 -3.32%
Zinc (London) 1844 -33 -1.76%

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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