IG Markets - Morning thoughts and Opening Prices

Good morning,

Risk assets were well bid in the European session on Friday, but a reversal in US trade saw most of these gains erased. AUD/USD raced to a high of 1.05193 as commodities were bought up, but soon dropped back to 1.045 in US trade. EUR/USD endured some volatility, oscillating around 1.30 before settling a touch below 1.30. There was just no significant catalyst to keep driving markets higher in US trade and they went back into consolidation mode. Focus seems to have switched to Spain now following the Financial Times report suggesting that EU officials are working with the Spanish government behind the scenes for a new rescue programme for Spain. However, with German Chancellor Angela Merkel in no rush to introduce a banking union while French President Francois Hollande feels it should be done as soon as possible, it already seems like there is tension at the top in Europe. This week is going to be an important one on the European front with Spain reportedly looking to unveil an economic reform programme on Thursday.

Ahead of the open, we are calling the Aussie market down 0.2% at 4398. We head into the last trading week of the quarter with the ASX 200 around 7.5% higher. It will be interesting to see if we can hold on to this gain with some of the euphoria around the Fed and ECB waning. Risk currencies have had a fairly flat morning and haven’t given much indication of a change in sentiment from Saturday’s close. There is nothing major on the local economic calendar to look out for today. With China’s economy still not showing strong signs of a rebound as evidenced by last week’s PMI number, market participants will continue to monitor the wires for any comments by Chinese officials.

On a stock level, we expect a softer start for BHP Billiton with its ADR suggesting it will be down 0.7% at the open to $33.48. Iron prices dropped back to $106.40 and this might also impact the iron ore giants. Gold related stocks will be interesting to watch after the precious metal spiked to a high of $1787 on Friday. Some of the gold stocks which have had a good run lately and deserve some attention are Medusa Mining, Regis Resources and OceanaGold. Medusa is presenting at a HSBC Global Natural Resources Conference in Singapore. Nufarm has reported its full-year earnings today and Premier Investments has had some broker re-ratings following its big profit jump last week.

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.

ENDS

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