IG Markets - Morning thoughts and opening prices

Good morning

Overnight, US markets rallied after Ben Bernanke’s downbeat assessment of the US economy before a senate committee gave hopes that more quantitative easing from the Fed could soon be on the cards.

Stocks initially fell during Bernanke’s prepared testimony as the Fed Chairman provided no specific plans for boosting growth. However, equities reversed course and commodities pared earlier losses during ‘question and answer time’, when Bernanke said he was concerned about the economy, that inflation would not be a hindrance to providing more stimulus and that the Fed stood willing and able to enact further asset purchases, particularly if the labour market didn’t improve. Essentially, it was the ‘we’ll wait and see’ approach that the Fed has adopted over the course of this year, but weakening economic data and Bernanke’s clearly growing concerns over the state of the US recovery has investors now suggesting it is a matter of ‘if’ and not ‘when’ the Fed will enact further balance sheet expansion.

Turning to the local market, we are currently calling the ASX 200 to unwind approximately 8 points or 0.2% higher at 4149. The marginal rise can no doubt be attributed to yesterday’s unexpected strength, which caught many by surprise as it came on a day when we had flat to lower offshore leads and had expected a relatively mundane session. Yesterday’s gains would have been even higher had it not been for some late day weakness from Rio Tinto, whose shares slumped after delivering a flat Q2 production report, and downgrades to full-production for three of its key commodities. Attention and the obvious comparisons will fall on BHP who reports its quarterly production numbers pre-market today.

Despite the advance in the US overnight, we shouldn’t expect a repeat of yesterday’s gains. Rather we’re more likely to trade in a tight range with a slight upside bias.

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.

Cameron Peacock
Market Analyst
IG Markets
www.igmarkets.com.au

ENDS

© Scoop Media