IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

After having received a lift from the ECB's Nowotny yesterday, risk assets took a leg higher on the back of some comments from ECB President Mario Draghi today. Mr Draghi asserted that the ECB is ready to do whatever it takes to preserve the euro. This triggered a short squeeze which sent EUR/USD beyond the 1.23 level. Other risk currencies also rallied, with AUD/USD surging to a high of 1.04228. The ECB is set to meet on August 2, one day after the FOMC delivers its policy verdict, and hopes for bolder action from Mr Draghi will remain elevated in the interim. With renewed hopes that the ECB will take further action to address the crisis, regional markets are facing the prospect of a positive finish to the week. Over in the US, equities were lifted by mostly positive corporate earnings and some better-than-expected economic data. However, Facebook shares plunged yet again after its earnings disappointed.

Ahead of the open, we are calling the Aussie market up 0.9% at 4183. There isn’t anything on the local economic calendar to look out for today. However, we are likely to see plenty of broker ratings changes following the trading updates we’ve received this week. The Aussie dollar deserves some attention as AUD/USD approaches its high from a week ago. The pair should remain well supported by the calming we are seeing in markets.

On a stock level, we expect a strong start for BHP Billiton, with its ADR pointing to a 0.8% rise to $31.21. Unfortunately most of the commodities were only modestly higher despite having spiked early. This might cap some of the gains in the resource space. Gold stocks will be watched closely over the coming sessions as focus of the markets is quickly shifting to central bank response to slowing global economies and the intensifying eurozone sovereign debt crisis. Gold prices are generally supported by this OceanaGold has reported second quarter earnings along with a 10% rise in quarterly output. Qantas will remain in focus yet again today after Emirates confirmed it is in talks on code shares. In the media space, APN News and Fairfax are reported to be considering asset write-downs worth ‘hundreds of millions’.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0395 0.0060 0.59%
ASX (cash) 4183 35 0.85%
US DOW (cash) 12876 172 1.35%
US S&P (cash) 1358.6 19.3 1.44%
UK FTSE (cash) 5583 69 1.24%
German DAX (cash) 6572 140 2.18%
Japan 225 (cash) 8525 82 0.97%
Rio Tinto Plc (London) 28.23 0.59 2.15%
BHP Billiton Plc (London) 18.20 0.38 2.10%
BHP Billiton Ltd. ADR (US) (AUD) 31.21 0.24 0.77%
US Light Crude Oil (September) 89.34 0.71 0.80%
Gold (spot) 1615.0 7.8 0.49%
Aluminium (London) 1877.375 2 0.08%
Copper (London) 7468.875 22 0.30%
Nickel (London) 15867.5 -22 -0.14%
Zinc (London) 1876.875 16 0.88%

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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