Global Markets Overview – June 23, 2014

Risk currencies got off to a bit of a negative start this morning, despite a lack of fresh sentiment drivers for the region. Perhaps some reports suggesting escalating Iraq tension have seen risk modestly offered this morning. This is despite US equities finishing the week on a modestly positive note in a fairly quiet session. The only notable news out of the weekend were comments by ECB President Mario Draghi suggesting the ECB has prolonged banks' access to unlimited liquidity up to the end of 2016. This hasn't had much of an impact on the single currency this morning as it has swiftly closed the gap from the open and is now relatively unchanged from Saturday's close against the greenback.

It is a busy day on the European calendar with a raft of manufacturing and services PMIs on the calendar. Not much of a change is expected from most of these readings and focus is likely to remain on Draghi's comments.

Manufacturing likely to improve

Asia will be focusing on the HSBC flash manufacturing PMI print today which is expected to show an improvement to 49.7. The data will be released at 11.45 AEST and expectations will be fairly high given China's recent stimulus efforts. China data always has the potential to be a big risk mover. With expectations quite high there is always potential for downside risk. Gold will remain one of the key asset classes to watch this week, along with the emerging market complex. The precious metal is sidelined from Friday but remains in a near term uptrend. Dips are likely to be used as an opportunity to buy. Locally, there isn't much data at all this week which means the AUD will be getting its leads from emerging markets and other macro themes. As it stands it seems a relatively tight range around that 0.9400 region will be maintained.

Materials key for the ASX 200

Ahead of the open we are calling the ASX 200 up 0.3% to 5433. Once again the stabilisation in the commodities space will be significant for the materials names. We could continue to see some buying interest in some of the gold and iron ore miners. An escalation of the Iraq situation is likely to keep the energy names bid this week as well. On the company news front we have Metcash's FY earnings and reports suggesting Providence Equity Partners is eyeing a potential bid for Ten Network. Buying in WDC and WRT didn't really last long despite the vote going through on Friday, as both stocks closed well off their highs. These two stocks will be interesting to watch this week.

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