IG Markets - Morning Thoughts

IG Markets - Morning Thoughts

US equities finished a shortened trading week on a negative note ahead of the presidential elections. The losses came despite better-than-expected jobs numbers, which helped lift the US dollar. Non-farm payrolls came in at 171,000 (versus 125,000 anticipated), while the unemployment rate ticked higher to 7.9% as expected. This resulted in some interesting moves in the currency and commodity space. Risk currencies were sharply sold off against the greenback, with EUR/USD slipping from around 1.294 down to 1.282. AUD/USD tested 1.04 only to be met by sellers and declined to 1.033. USD/JPY continued its ascent and printed a high of 80.68 before retreating to around 80.5. Commodities struggled as gold extended its losses below US$1700, while oil and nickel dropped around 2% each. It will be a big week in the fx space with policymakers meeting locally, in Europe and England.

Ahead of the open, we are calling the Aussie market down 0.4% at 4442. Traders will be eyeing the 4448 level, which was previous resistance for the ASX 200 and could present near-term support. Price action locally is likely to track interest rate expectations for Melbourne Cup Day. So far, consensus forecasts are for a 25 basis point cut to 3%. However, there are a growing number of analysts who feel the RBA is more likely to stay on hold as the recent rate cuts filter through. There has already been evidence of improving consumer sentiment, particularly in the property market where we are seeing signs of a recovery. On the economic front today we have retail sales and trade balance as the main releases to look out for. Other releases to look out for are the AIG services index, MI inflation gauge and ANZ job ads. AUD/USD has stabilised this morning, but volatility is likely to ramp up as some of the data hits the wires. Elsewhere in the region, Japan’s Nikkei will be one to watch as recent yen weakness is likely to support its exporters.

On a stock level, we expect to see a softer start for BHP Billiton, with its ADR pointing to a 0.4% fall to $34.30. A tough session for commodities on Friday will see the resources on the back foot when the market opens today. In the financial space, Westpac has reported FY earnings today with its cash profit rising 5% to $6.6 billion. This is at the top end of a $6.36-$6.58 billion analyst range. Its 84 cent dividend was in line with estimates, as well as a 5 basis point fall in net interest margin to 2.17%. At first glance, the result seems solid. However, the question investors will be asking is if the result is enough to justify the 25% rally its share price has had this year. If so, then we could see WBC extend its gains today and support its peers.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 1.0341 -0.0055 -0.52%
ASX (cash) 4442 -18 -0.40%
US DOW (cash) 13066 -153 -1.16%
US S&P (cash) 1409.2 -16.6 -1.17%
UK FTSE (cash) 5839 -17 -0.29%
German DAX (cash) 7323 -9 -0.12%
Japan 225 (cash) 9006 -40 -0.44%
Rio Tinto Plc (London) 32.13 0.48 1.51%
BHP Billiton Plc (London) 20.24 0.15 0.72%
BHP Billiton Ltd. ADR (US) (AUD) 34.30 -0.12 -0.35%
US Light Crude Oil (December) 84.79 -1.91 -2.21%
Gold (spot) 1677.0 -32.0 -1.87%
Aluminium (London) 1925 -13 -0.68%
Copper (London) 7665 -128 -1.65%
Nickel (London) 15975 -370 -2.26%
Zinc (London) 1874 -16 -0.85%
Iron Ore 120.1 -0.20 -0.17%

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

ends

© Scoop Media