Global markets were mixed overnight, with Europe weaker, but the US stronger. Softness in the European session came on the back of rising borrowing costs for Spanish debt and reports that new Italian Prime Minister Mario Monti met resistance in forming a cabinet. However, there was a turnaround in the US session on improved optimism around Mario Monti's ability to battle the debt crisis, plus some impressive US economic data.

Among the major averages, the Dow Jones Industrial Average climbed 0.1% to end at 12096. The S&P advanced 0.5% to close at 1258, and the NASDAQ surged 1.1% to close at 2686. Retail sales in the US rose 0.5%, smashing expectations of a 0.3% gain. There is certainly a huge improvement in the US economy with most of the recent data painting an optimistic picture. This is also backed by a solid reporting season which saw US corporate earnings impress.

Relief came after Mario Monti requested a meeting with Italian President Giorgio Napolitano later today, where he will reportedly present his new cabinet. This gave markets confidence that he had overcome some of the hurdles he had faced in forming it. However, debt yields in Italian, Spanish and French bonds remain high, which still leaves a high level of uncertainty for investors.

Disappointingly, US markets gave up some of their gains into the close, with a high level of risk from jumping European sovereign debt yields leaving investors cautious. The Aussie market is working on mixed leads following the see-saw trading we witnessed overnight. We are currently calling the Aussie market to open up 0.3% at 4297. The materials space might get a strong lead after a 5.8% gain in spot iron ore prices overnight. BHP Billiton is pointing towards a 1.5% gain on the open. In the financials space, Commonwealth Bank (CBA) has been downgraded to Sell (from Neutral) by Citi as the broker expects CBA's valuation premium to come under pressure. This could see some traders look to reposition funds into National Australia Bank which has enjoyed some solid business momentum over the past year.

Market

Price at 8:30am AEST

Change Since Australian Market Close

Percentage Change

AUD/USD

1.0183

0.0016

0.16%

ASX (cash)

4297

12

0.28%

US DOW (cash)

12082

3

0.02%

US S&P (cash)

1257.3

5

0.42%

UK FTSE (cash)

5530

31

0.56%

German DAX (cash)

5953

17

0.29%

Japan 225 (cash)

8532

-3

-0.04%

Rio Tinto Plc (London)

34.58

0.35

1.02%

BHP Billiton Plc (London)

19.61

-0.10

-0.51%

BHP Billiton Ltd. ADR (US) (AUD)

37.36

0.48

1.30%

US Light Crude Oil (Dec)

99.39

1.65

1.69%

Gold (spot)

1781.0

13

0.71%

Aluminium (London)

2140.00

-16

-0.74%

Copper (London)

7753.00

34

0.44%

Nickel (London)

17575.00

-225

-1.26%

Zinc (London)

1923.00

-20

-1.03%

RBA Cash Rate to be decreased by 25bp (Dec) (%)

42.00

-1

-1.00%

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 Strategist

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