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IG Markets morning prices

NZPA

Wednesday 20th July 2011

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In the US overnight, stocks posted their biggest gains since March as traders focused on a set of very strong Q2 earnings results, stronger-than-expected housing data a positive comments from President Obama on a possible debt agreement.

The technology-laden NASDAQ was the standout performer, rising 2.2% while both the S&P 500 and Dow Jones Industrial Average added 1.6%.

Locally, the ASX 200 is called to open the session 1% higher at 4512 following the broad-based gains seen overnight. Today's rally is likely to be widespread as all US sectors finished firmly in the black. Technology, consumer discretionary and energy led the way, all rising more than 1.8%.

Consumer discretionary names should see strong buying following the lift in US sentiment. The likes of Amazon, eBay, Carnival and News Corp were all up more than 2.7%, with News Corp gaining following Murdoch's UK parliamentary testimony.

Energy names are likely to well bid following a jump of 2.2% in crude oil futures to US$98.35/bbl. ExxonMobil, Chevron and ConocoPhillips were all stronger by more than 0.1% while the likes of Chesapeake Energy and Anadarko rallied 2.3% and 3.9% respectively.

Materials should have a good session too after the US basic materials sector rose 1.5%. Base metal leads from the LME were all up more than 0.9% with Rio Tinto and BHP Billiton rising 1.4% and 1.7% in London trade. BHP's ADR is calling the local stock to open 0.5% higher at $42.83.

After their very strong run, precious metals and their associated stocks may see a bit of a breather today after both gold and silver snapped their winning streaks. Gold rallied to a fresh high of US$1609.80/oz before retreating significantly to currently be at US$1587.9/oz. That equates to fall of 1.1% since our 4.30pm close yesterday.

Financials should have a reasonable session despite a weaker-than-expected result from Goldman Sachs and Bank of America, which were down 0.7% and 1.5% respectively. Elsewhere, gains were widespread as the likes of JPMorgan, Citigroup and Wells Fargo all rose more than 0.7%, with Wells surging 5.7%.

Despite having a near nonexistent local tech sector, the performance of US tech giants should help spread positive sentiment through our market today. Microsoft, Oracle, IBM and Intel all surged more than 3.5% following IBM's result yesterday. On top of that, Apple added to session gains of 0.8% to surge more than 7% after hours after smashing expectations with its Q2 results.

Analysts had been expecting earnings per share of $5.85; it came in at $7.79 as sales of iPads nearly tripled. Revenue surged to $28.57 billion against forecasts of $24.9 billion. Put simply, the ultimate stock in any economic climate.

In summary, it should be a strong open for the domestic market, although it will be interesting to see if the gains can be maintained for the bulk of the session. Our opening call has probably got some upside risk in given how much we have underperformed recently. With little in the way of economic news, trade is going to be driven by the reaction to the overseas leads from Asian markets.

In currency action, the AUD/USD benefitted from the improvement in risk appetite, climbing through the 1.07 level to currently be trading at 1.0726. The EUR/USD managed to put on gains, although it did close off highs after Angela Merkel told the market to ‘not expect a miracle' from Thursday EU emergency summit. It's currently trading at 1.4159.



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