IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

Risk assets were mostly in a holding pattern yet again, with a slightly negative bias as market participants wait on central banks to announce their policy decisions. The euro had a rather volatile overnight session, with EUR/USD generally trending lower before a rather well-received EFSF auction prompted a rebound towards 1.23. Concerns about how aggressive the ECB will be in backing Mario Draghi’s pledge to save the euro seems to be weighing on risk assets ahead of the ECB meeting. A growing number of analysts now feel that any further easing is far more likely at the September meeting. This will give the Fed two additional months of employment data to peruse, and the Jackson Hole conference at the end of August will provide Ben Bernanke with a timely opportunity to prepare the market for any easing decision.

Ahead of the open, we are calling the Aussie market down 0.5% at 4249. After a strong finish to the month yesterday, we could see a degree of caution being exercised ahead of key event risks. On the economic front, we have China manufacturing PMI numbers to look out for. The data is expected to show a slight improvement to 50.4 (from 50.2). China PMI generally has a pretty significant bearing on how risk assets trade. As a result, it is likely to be the key catalyst in the price action today. The Aussie dollar will be in focus after AUD/USD printed a new high of 1.05386 yesterday. The pair is currently trading just shy of 1.05 and we are likely to continue seeing traders buy into the dips A violation of 1.0558 would suggest scope for further upside.

On a stock level, we expect a soft start for BHP Billiton, with its ADR pointing to a 1% drop to $31.61. The sluggish price action in commodities is likely to weigh on the resources names today. Molopo is one to watch today after saying it has sold its coal-seam-gas assets in Queensland to PetroChina for $41 million. A Nathan Tinkler-led group is reportedly considering lowering its offer for Whitehaven Coal following the recent share price slump. Reports in the AFR suggest the ACCC is likely to clear News Corp’s bid for Consolidated Media.

Market Price at 6:30am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0493 -0.0029 -0.27%
ASX (cash) 4249 -20 -0.48%
US DOW (cash) 13003 -85 -0.65%
US S&P (cash) 1376.7 -10.9 -0.78%
UK FTSE (cash) 5621 -75 -1.32%
German DAX (cash) 6753 -38 -0.56%
Japan 225 (cash) 8603 -92 -1.06%
Rio Tinto Plc (London) 29.47 0.10 0.35%
BHP Billiton Plc (London) 18.70 -0.10 -0.55%
BHP Billiton Ltd. ADR (US) (AUD) 31.61 -0.32 -1.00%
US Light Crude Oil (September) 87.96 -1.74 -1.94%
Gold (spot) 1614.3 -8.6 -0.53%
Aluminium (London) 1889.5 -6 -0.32%
Copper (London) 7541.875 -28 -0.37%
Nickel (London) 15825 -313 -1.94%
Zinc (London) 1917.625 -27 -1.37%

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.

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