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IG Markets Morning Prices

Fuseworks Media
Fuseworks Media
IG Markets Morning Prices

On Wall Street overnight, stocks finished the session slightly lower as profit taking kicked in following three sessions of strong gains and surging oil prices reignited talk that high energy prices may hinder the global economic recovery. Rising yields in the peripheral Eurozone nations also did little to boost sentiment.

The S&P 500 was the largest decliner, falling 0.4% while the Dow Jones Industrial Average and NASDAQ retreated 0.2% and 0.3% respectively.

In Australia, the ASX 200 is called to open the session 0.1% firmer at 4649 despite the moderately weaker overnight lead. As has been the case recently, leads from the US look to be of limited value as all finished flat or in negative territory; it's very difficult to see where gains may come from among local sectors.

The consumer discretionary and industrial sectors were the weakest performers in US trade, both declining 0.8%. The financial sector lost 0.5% with the likes of Bank of America and Wells Fargo both down 1.2% respectively. We're also likely to see some weakness among material names after the US basic materials space retreated 0.2%.

Base metals on the London Metals Exchange were mostly higher but this didn't translate into gains in London equities trade, with Rio Tinto and BHP Billiton slipping 1.1% and 1.3% respectively. Consequently, BHP Billiton's ADR is pointing towards a decline of 0.8% to $43.87 at the open. Gold saw a breather following an impressive rally over the last few days; it fell 0.1% to be US$1426.8/oz.

Most of the talk was about the energy complex overnight, with Crude Oil futures surging another 2.8% to US$104.88/barrel, just off highs of US$105.16/barrel. Natural gas and heating oil also jumped, both rising more than 1.2% as Middle East concerns weighed and markets speculated that the rebuilding effort in Japan will increase their demand for energy. The big question will be whether or not energy stocks will jump higher on this move or sell off on fears the high prices will hurt the global recovery?

In summary, it looks like a relatively uneventful open to the session, with news flow from Japan and the Middle East once again taking centre stage. How traders react to the resurgent oil price will also be key.

In currency markets, the standout performer overnight was the sterling as, once again, the Bank of England were reminded that they have a clear inflation problem. CPI data increased to 4.4%, higher than analysts' expectations and at levels the BOE suggested inflation would peak at; don't be surprised if the BOE are forced to raise their inflation target to around 5% in the near future.

GBPUSD pushed up to 1.6041 and GBPEUR had its biggest one day gain in over a month as credit markets priced in higher odds of a rate hike. Traders will be focused on tonight's BOE meeting minutes and the annual budget, which could induce some volatility in sterling.

The EURUSD came under marginal pressure, falling from an overnight high of 1.4247 back towards the 1.42 mark. Traders focused peripheral Europe, with speculation Allied Irish bank would miss its coupon payments and potentially default on its debt.

Portugal also has a key vote tonight on its austerity plans, with the opposition government seemingly not interested in a compromise; this could see the Euro come under further pressure. With a growing number of traders expecting Portugal to receive aid from the EU/IMF, failure to agree on the necessary budget cuts could see this play out sooner rather than later. However, given expectations of a rate hike as soon in April, expect any EURUSD weakness to be well supported.

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