Australian Stock Market Leads - 03/01/2012

The Australian stock market is seen taking on the negative leads in today's trading signifying the impact of U.S. Federal Reserve chairman Ben Bernanke's statement that quantitative easing (QE3) may not happen soon as expected.

Global markets overnight reacted negatively, slightly shedding during last hours of trade with Mr Bernanke's statement indicating that the U.S. economic growth is still "uneven and modest" and that rising gasoline and oil prices will affect the U.S. inflation and the jobs market being "far from normal."

Analysts perceived this will be taken in pessimistically in Australia. The commodities-heavy stocks and the risk-related Aussie will likely feel the pressure shedding earlier gains.

IG Markets analyst Cameron Peacock says that "this realisation had the most profound impact within the currency markets, with risk currencies such as the euro and the Aussie paring earlier gains as funds flowed back to the USD."

Mr Peacock, however, acknowledged the relative strength of the equities market because the prospect of no further quantitative easing did not result to heavy declines at the moment.

"The local market is set to open lower at approximately 41 points or 0.9% at 4258, with materials names being the most likely losers. The stronger dollar and resulting weakness in commodity prices saw major US commodity producers come under heavy selling pressure, and this is set to continue today with BHP's ADR suggesting the local heavyweight will open 30 cents or 0.8% weaker at $35.80," adds Mr. Peacock.

He notes that BHP Billiton (ASX: BHP), Rio (ASX: RIO) and Fortescue (ASX: ) may post losses across the materials sector.

A market moving data to be released later on today that could temper falls is the Chinese manufacturing data or PMI. A reading of 50.9 on the China's PMI is expected. Nonetheless, a stronger China PMI will result to good buying opportunity for the materials sector.

One piece of data that could temper expected falls today is the release of Chinese manufacturing PMI data at midday. Expectations are for a reading of 50.9, but anything stronger might lead some investors to see any early weakness in materials names as a good buying opportunity.

In terms of local economic data, the Australian industry group will release the manufacturing index, the government will issue the building approvals and private capital expenditure data due out at 11.30am AEDST will provide the latest read on the health of the domestic economy.

CHART FROM IG MARKETS - March 1,2012

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.