Global Markets Overview - 11/29/2011

Global markets rallied overnight as European leaders drafted a framework for a bailout fund for the region. Strength shown in the Asian session resonated in the US and Europe, as investors got a chance to react to the positive developments from the weekend. Investors are increasingly optimistic that European leaders will draft a comprehensive bailout plan which involves better fiscal integration, plus insure bonds of debt-stricken countries with guarantees of 20% to 30%.

Among the major averages, the Dow Jones Industrial Average advanced 2.6% to end at 11523. The S&P climbed 2.9% to 1193 and the NASDAQ soared 3.5% to close at 2527. European markets enjoyed even bigger gains after having sold off for the best part of two weeks.

Equity and commodity investors reacted with a sense of euphoria, which resulted in big advances for risk assets. Although the moves in the immediate and short term might reflect more 'risk-on' behaviour, if the key debt auctions out of Europe for the remainder of this week fail to impress, we will be right back where we started very quickly. Many analysts still feel the fundamental drivers behind the rally are lacking, and that this could be just a correction.

Given the fact that the Aussie market already had a chance to react to the developments from the weekend, we are calling the ASX 200 to open up 0.8% at 4091. Cyclical stocks are likely to be well supported after the gains we saw in risk assets overnight. Strong advances for metals and energy commodities could see our local resource stocks have yet another big day.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 0.9899 0.0059 0.60%
ASX (cash) 4091 33 0.81%
US DOW (cash) 11511 139 1.22%
US S&P (cash) 1193.0 17 1.45%
UK FTSE (cash) 5312 103 1.98%
German DAX (cash) 5733 158 2.83%
Japan 225 (cash) 8390 93 1.12%
Rio Tinto Plc (London) 31.64 1.31 4.32%
BHP Billiton Plc (London) 18.37 0.77 4.38%
BHP Billiton Ltd. ADR (US) ( AUD ) 35.19 0.34 0.98%
US Light Crude Oil (Jan) 97.72 0.40 0.41%
Gold (spot) 1712.0 5 0.29%
Aluminium (London) 2026.00 34 1.71%
Copper (London) 7495.00 265 3.67%
Nickel (London) 17180.00 230 1.36%
Zinc (London) 1957.00 47 2.46%
RBA Cash Rate to be decreased by 25bp (Dec) (%) 54.00 3 3.00%

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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