IG Markets - Morning thoughts and opening prices

Good morning

Overnight, US markets edged higher ahead of Friday’s non-farm payrolls report, after some supportive words from ECB President Mario Draghi, plus a strong performance from Republican candidate Mitt Romney in the first US Presidential debate.

Yesterday in Asian markets, US futures edged noticeably higher over the course of the first US Presidential debate, with Mr Romney putting in a surprisingly strong performance, and by most commentators’ accounts getting the better of President Obama, particularly on issues relating to the economy. It seems the slightest improvement in Mr Romney’s numbers, or the faintest whiff of a Republican victory could be enough to push US equities higher. Mr Romney’s performance was certainly a talking point of the overnight US session, and undoubtedly a tailwind for US markets.

Also supporting the market were comments from Mario Draghi. While the ECB left interest rates on hold at 0.75% as expected, Mr Draghi stated that the ECB’s bond buying programme had eased market tensions while reiterating that the bank stood ready to buy the bonds of EU member countries that asked for assistance. This seemed a clear invitation to Spain to do so. His comments helped enforce the implied backstop for European economies and equity markets and helped push the euro back above 1.30 to the current level of 1.3015.

Looking ahead to today’s local session, the ASX 200 is set to post a fresh 2012 high with the benchmark index set to unwind 14 points or 0.3% firmer at 4466. Gains today should be relatively broad based with the financials, materials and energy sectors likely to be among the better performers based on US leads. Supporting this notion was the strong overnight performance of most of the base metals complex and a sharp rebound in crude prices, which rose nearly 4% on escalating tensions between Turkey and Syria.

While a solid open is on the cards, some caution is likely to prevail as it always does on a ‘non-farms Friday’.

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.

CAMERON PEACOCK
Market Strategist
www.igmarkets.com.au

ENDS

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