IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Risk assets took another leg lower in the wake of the German ratings outlook downgrade by Moody's, which put European bond markets on the defensive. The risk-off session saw the euro struggle, with EUR/USD trading as low as 1.2042. Sentiment in Europe was also hurt by disappointing German and French manufacturing PMIs for July. Troika initiated its review of Greece, and it seems investors are speculating some negative headlines on that front. Over in the US, it was a case of disappointing earnings with United Parcel Service and Apple in focus. A Wall Street Journal article suggesting the Fed is close to announcing further stimulus didn’t aid risk assets much, but helped limit the downside.

Ahead of the open, we are calling the Aussie market down 0.8% at 4101. We saw futures extend their losses after Apple missed its iPhone sales targets. This result saw Apple shares slide around 5%. On the local economic front, there is plenty to look out for, with CPI data due out at 11.30am. The Aussie dollar has been under pressure this morning and AUD/USD is currently testing the lows from the US session. Should the current weakness persist, we could see the pair trade sub-1.02 this morning. This would leave the pair open for a move back to parity. The Australian Q2 CPI report will shape expectations for next month's RBA meeting.

On a stock level, we expect a weaker start for BHP Billiton, with its ADR pointing to a 1.3% drop to $30.52. Resource names enjoyed a stellar recovery yesterday on the back of China’s HSBC flash PMI reading. However, the leads the sector is facing today suggest we could see these stocks struggle. Gold eked out a gain as talk of further Fed easing ramped up. This might lend some support to the gold miners. OZ Minerals and Macquarie Group have announced some key updates which will influence how their stocks trade today. Stockland will also be one to watch today after cutting its FY12 EPS guidance to 29.3 cents (from 29.8 cents).

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0242 -0.0057 -0.55%
ASX (cash) 4101 -32 -0.78%
US DOW (cash) 12582 -126 -0.99%
US S&P (cash) 1333.7 -14.4 -1.07%
UK FTSE (cash) 5477 -82 -1.47%
German DAX (cash) 6350 -76 -1.19%
Japan 225 (cash) 8396 -92 -1.08%
Rio Tinto Plc (London) 27.93 -0.31 -1.08%
BHP Billiton Plc (London) 17.73 0.07 0.40%
BHP Billiton Ltd. ADR (US) (AUD) 30.52 -0.41 -1.32%
US Light Crude Oil (September) 88.65 -0.06 -0.07%
Gold (spot) 1580.7 3.1 0.19%
Aluminium (London) 1867.75 -17 -0.88%
Copper (London) 7391 -97 -1.29%
Nickel (London) 15707.5 19 0.12%
Zinc (London) 1853.25 -20 -1.08%

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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