Morning Prices - IG Markets

The Australian market looks set to test the 4500 level after a relatively flat read from Wall Street. The S&P 500 closed unchanged on the day at 1101, reversing an early 13 point or 1.1% loss on open. On the day 56% of companies saw gains with the Consumer services and the Materials sector the best performers.

The eagerly anticipated US GDP showed the economy had slowed to an annualised rate of 2.4% in the second quarter, which was lower than expected and down from an upwardly revised rate of 3.7% in the first quarter. Traders immediately took this as negative and sold out of equities on open pushing the index down to test uptrend support at 1088. However, stronger than expected numbers from a final read on University of Michigan consumer sentiment and Chicago manufacturing numbers saw traders pushing the index back towards 1100.

With the US$ lower against the Yen and the Euro maintaining the 1.30 level commodities were the big winners. Gold was up over 1% from our Friday close and that move will need to be priced into our gold miners, Barrick Gold in the US was up 1.4% so that may be indicative of how Newcrest and Lihir may also open.

Copper and other base metal continued on their upwards trajectory with the strong Chicago manufacturing data helping them along. BHP's adr however is pointing to an open around $39.94 down 0.4%. The slightly weaker than expected Chinese PMI data that was released on Sunday may weigh on material names, however it was still higher than some of 'whisper' numbers that saw manufacturing contracting in China. The fact risk currencies have opened up slightly higher this morning suggests the PMI number will not weigh on the market too much.

Banks have no real lead in today and although they were the second best performing sector last week behind the Staples sector look set for a flat open today. Valuations are still trading at sizeable discounts to long term averages and the watered down Basel agreements last week has helped sentiment towards them. Macquarie group did see a good rally from the lows on Friday and seems that some traders see them as good buying below a$36.00.

Telstra announced it is likely to take a $170m impairment charge on Friday on the carrying value of CSL New world in its FY2010 results. Importantly they re-affirmed FY2010 guidance although said EBITDA may fall slightly as a consequence of the impairment charge.

Elsewhere look out for earnings from Crane group (CRG), economic reports in Australia on manufacturing at 09.30 and TD inflation numbers at 11.00, although we don't expect these to create much in the way of volatility.