IG Markets - Morning thoughts and opening prices

Good morning,

The US dollar struggled after weaker-than-expected US economic data stoked talk of further quantitative easing. However, equities were generally buoyant amid speculation that disappointing economic data will lead the Fed to add stimulus. The Philly Fed current activity index improved to only -12.9 in July, while existing home sales defied expectations for a gain by falling 5.4% month-on-month in June. Initial claims rose 34,000 to leave the four-week average at 376,000 for the sample week of the July employment report, down only modestly from 388,000 in the June report sample week. A weaker greenback left the Aussie dollar in prime position to extend its gains, as AUD/USD printed a high of 1.04445. The local currency continues to gain momentum against most of the majors and we will see some key resistance levels tested in the near term.

Ahead of the open, we are calling the Aussie market down 0.2% at 4199. This is not too surprising after the big rally enjoyed by local equities yesterday. The 4200 mark will be the key level to look out for going into the end of the week. From a technical perspective, the ASX 200 is also testing its 200-day moving average and a close above this would be a bullish sign. On the local economic front, RBA assistant governor Christopher Kent is scheduled to speak and we have import prices data at 11.30am.

On a stock level, we expect a firmer start for BHP Billiton, with its ADR pointing to a 0.3% start to $31.22. After having a big day yesterday, some of the resource majors might enjoy some follow-through buying at the open. Energy stocks could get a lift as oil prices continue to surge on supply concerns. Elsewhere in the commodities space, wheat and soybeans added more than 1% as the worst US drought since 1956 scorched fields. As a result, Graincorp will be one of the stocks to watch today.

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.

Kind regards,
Stan Shamu
Market Strategist
IG Markets
www.igmarkets.com.au

ENDS

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