Australian Markets Overview

In US trade, markets declined in a decidedly risk-off session. A sharp rise in Spanish and other peripheral European sovereign debt yields dented investor confidence. The inability of Spain's fiscal austerity measures to alleviate the pressure in the bond market is worrisome, as Economy Minister Luis de Guindos declined to rule out a rescue for the country, and Bank of Spain Governor Mr Ordonez said Spanish lenders may require additional capital if the economy weakens more than expected.

Among the major averages, the Dow Jones Industrial Average was down 1.7% at 12716. The S&P was 1.7% lower at 1359, while the NASDAQ shed 1.8% to finish at 2991. This was the S&P's biggest fall since December 8 last year and the Dow's largest drop since November 23 last year.

The European stock markets tumbled, led by falls in the Spanish and Italian banking sectors. This could weigh on the local banks today after having held up so well over the past few weeks. We also expect to see weakness in the resource space after commodities took a beating. Copper dropped to a three-month low, while oil fell 1.2%. BHP's ADR is pointing to a 1.8% drop at the open to $33.65. The last time BHP was at these levels was in September last year when it printed a low of $33.68. As a result, we could see some buying interest at those levels. Gold stocks might outperform after the precious metal bucked the commodity trend and rose 1.0% due to safe-haven flows. The defensive sectors are also likely to outperform as investors seek safety.

Ahead of the open, we are calling the Aussie market down 1.2% at 4240. Investors will be eyeing the 4240 to 4250 region for support, as it has held fairly well in the past. On the economic front, we have Westpac consumer sentiment and home loans data due out today. Elsewhere in the region, Japan's Nikkei is likely to struggle after the yen rallied against the greenback.

Market	Price at 6:30am AEST	Change Since Australian Market Close	Percentage Change
AUD/USD	1.0254	-0.0064	-0.62%
ASX (cash)	4240	-50	-1.17%
US DOW (cash)	12752	-201	-1.55%
US S&P (cash)	1363.0	-22.0	-1.59%
UK FTSE (cash)	5555.0	-130	-2.29%
German DAX (cash)	6581.0	-158	-2.34%
Japan 225 (cash)	9342	-196	-2.05%
Rio Tinto Plc (London)	33.06	-1.54	-4.45%
BHP Billiton Plc (London)	18.32	-0.75	-3.93%
BHP Billiton Ltd. ADR (US) (AUD)	33.65	-0.60	-1.75%
US Light Crude Oil (May)	101.12	-1.17	-1.14%
Gold (spot)	1659.0	1	0.06%
Aluminium (London)	2065.00	-44	-2.09%
Copper (London)	8030.00	-331	-3.96%
Nickel (London)	18175.00	-230	-1.25%
Zinc (London)	1990.00	-13	-0.65%

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.

Stan Shamu, IG Markets Market Analyst

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