Global Markets Overview – June 11, 2014

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By Stan Shamu. IG Markets Strategist | June 11, 2014 9:11 AM EST

Global markets were in a holding pattern through European and US trade, with limited activity on the economic calendar. Perhaps the highlight was a further slide in the single currency, which helped keep equities afloat in Europe. However, emerging markets remain buoyant on the back of the measures China is taking to stimulate the economy.  China's move to cut reserve required ratios for a number of regional and agricultural banks saw Asian equities mostly enjoy gains yesterday with the exception of Japan. The Nikkei dropped quite significantly as yen strength weighed on Japanese equities. USD/JPY had enjoyed a solid run over the past few weeks but this has stalled as investors see less scope for further easing.

Recent releases out of Japan have been quite strong and it is looking less and less likely any significant measures will be announced to counter the sales tax hike. Even a round of firmer US economic data hasn't been enough to push USD/JPY higher and this has seen the pair test the 200-day moving average again. This level comes in around the 102.30 region and it'll be interesting to see if it holds in the near term. We are currently calling the Nikkei up 0.2%, but if this level fails to hold on USD/JPY, then we could possibly see another negative day for Japan.

Flat open for the ASX 200

Ahead of the local market open, we are calling the ASX 200 up 0.1% at 5475. This is not impressive at all particularly considering the sharp reversal lower in yesterday's afternoon trade. The materials space will be quite interesting today and we might see some disjointed moves given the mixed performances in the commodities space.

Platinum and palladium miners could be in for a tough day after strikes in South Africa resulted in some downside in price action. Iron ore also extended its losses, while copper concerns on the back of its use as collateral for shadow banking are heightening. Gold was perhaps the biggest beneficiary of the stimulus measures announced by China and finally managed to recover some ground. Gains for the precious metal should support the gold miners today.

While there continues to be talk of iron ore finding a bottom, it is clear investors have lost confidence in the sector for now and selling into strength is likely to remain the preferred strategy.

Telstra looks like it could be in for a bit of a recovery in the near term as investors return to yield plays for some comfort. The stock's dividend yield had dropped to the 5% region on share price appreciation, but the recent share price weakness might encourage fresh buying. On the local economic calendar we have Westpac consumer sentiment due out at 10.30 AEST.

Asian markets opening call

Price at 8:00am AEDT

Change from the Offical market close

Percentage Change

Australia 200 cash (ASX 200)

5,475.20

6

0.10%

Japan 225 (Nikkei)

15,018.80

24

0.16%

Hong Kong HS 50 cash (Hang Seng)

23,348.40

32

0.14%

China H-shares cash

10,509.40

1

0.01%

Singapore Blue Chip cash (MSCI Singapore)

375.75

1

0.15%

US and Europe Market Calls

Price at 8:00am AEDT

Change Since Australian Market Close

Percentage Change

WALL STREET (cash) (Dow)

16,955.50

32

0.19%

US 500 (cash) (S&P)

1,951.82

4

0.21%

UK FTSE (cash)

6,868.90

10

0.14%

German DAX (cash)

10,033.90

37

0.37%

Futures Markets

Price at 8:00am AEDT

Change Since Australian Market Close

Percentage Change

Dow Jones Futures (June)

16,943.00

37.00

0.22%

S&P Futures (June)

1,951.25

4.63

0.24%

ASX SPI Futures (June)

5,479.00

5.50

0.10%

NKY 225 Futures  (June)

15,005.00

15.00

0.10%

Key inputs for the upcoming Australian trading session (Change are from 16:00 AEDT)

Price at 8:00am AEDT

Change Since Australian Market Close

Percentage Change

AUD/USD

$0.9371

0.0005

0.06%

USD/JPY

¥102.360

0.060

0.06%

Rio Tinto Plc (London)

£31.54

-0.19

-0.60%

BHP Billiton Plc (London)

£19.12

0.07

0.39%

BHP Billiton Ltd. ADR (US) (AUD)

$36.24

-0.04

-0.11%

Gold (spot)

$1,260.30

5.33

0.42%

Aluminium (London)

1896

-16.00

-0.84%

Copper (London)

6697

22.25

0.33%

Nickel (London)

18700

-219.00

-1.16%

Zinc (London)

2133

-3.50

-0.16%

Iron Ore (62%Fe)

93.6

-0.70

-0.74%

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(Photo: / )
Workers wearing uniforms are seen in front of a cargo vessel at the port in Ningbo, Zhejiang Province, May 13, 2014. China is increasing its support for its wobbly trade sector with a raft of new measures that include giving more tax breaks, credit insurance and currency hedging options to its exporters. Picture taken May 13, 2014. REUTERS/Stringer (CHINA - Tags: BUSINESS MARITIME)
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