Daytrading July 25 pre-market

Morning traders. Thanks Trees.

Market wrap:
The share market has a tentative shot at an eighth straight advance after US stocks inched to a record close amid mixed economic and earnings news.

The September SPI 200 futures contract rallied eight points or more than 0.1% to 5540 after upbeat manufacturing reports from China and Europe bolstered optimism about the global economy. A measure of Chinese activity released yesterday was the best reading in 18 months. Overnight, a gauge of private-sector activity in Europe improved to a three-month high, beating expectations.

US stocks closed mixed at the end of a tight, range-bound session as investors weighed corporate earnings from the likes of Facebook and Caterpillar, disappointing housings news and an unexpected drop in jobless claims. The S&P 500 inched 0.05% to a new record close at 1,987.98. The Dow was hamstrung by a negative reaction to Caterpillar's quarterly update, falling three points or 0.02%. The Nasdaq lost two points or 0.04%.

“Markets are already at lofty levels and we need more good news to keep going higher,” Colin Cieszynski, chief market strategist at CMC Markets in the US, told MarketWatch. “Today’s economic and corporate news have been mixed. Earnings so far have supported the market, but there is cautious optimism among investors as we are entering historically weak months.”

Shares in Facebook surged 5.18% on news of unexpectedly strong mobile ad revenue. Ford was another winner, rising 0.34%. However, there were plenty of disappointments, including GM -4.46%, Caterpillar -3.08% and TripAdvisor -5.19%.

First-time claims for jobless benefits unexpectedly fell to an eight-year low. Applications dropped by 19,000 to 284,000 last week, the lowest level since February 2006, a positive signal for the labour market.

However, concerns about the housing market deepened after sales of new homes dipped to a three-month low last month. Sales of single-family homes declined by 8.1% to a seasonally-adjusted annual rate of 406,000, far below the 475,000 rate anticipated by economists. A measure of factory activity in the US unexpectedly deteriorated to 56.3 this month from 57.3 in June.

The market trimmed its gains following afternoon news that the troubled Espirito Santo Financial Group, a major shareholder in Portuguese lender Banco Espirito Santo, had sought court protection from its creditors. ESFG is the third company in the group to seek protection in two weeks. The news came too late to undermine gains on European markets following positive news on economic activity and a fall in Spanish unemployment. The Stoxx Europe 600 index rose 0.43% as Germany's DAX added 0.42%, France's CAC 0.78% and Britain's FTSE 0.34%.

Australia's biggest miners continued to resist the recent deterioration in the price of iron ore. BHP was flat in US trade and Rio Tinto advanced 0.79% after spot iron ore for import to China yesterday eased another 70 cents to US$93.60 a dry tonne.

China's upbeat manufacturing report and a drop in US oil inventories cushioned West Texas Intermediate crude oil from another downswing. Sweet crude futures for delivery in September fell $1.05 to settle at US$102.07 and was lately at  US$102.

A third straight loss pushed gold back below US$1,300 an ounce as equity earnings continued to dominate buying in the US. Gold for August delivery fell $13.90 or 1.1% to settle at US$1,290.80 an ounce. The contract was recently at US$1,294.

Copper surged on the Chinese factory news during a strong night on the London Metal Exchange. In London, copper rallied 2.1%, nickel 0.6%, aluminium 0.5%, lead 1.35%, tin 0.7% and zinc 0.6%. US copper for September delivery was recently up 1.7% or about six cents at US$3.26 a pound.

The dollar eased overnight, this morning buying 94.18 US cents.

TRADING THEMES TODAY

CONSOLIDATING THE GAINS: Wall Street could not find reasons to move far overnight, and it's likely the ASX will suffer the same malaise today after seven days of steady gains. The muted reaction to yesterday's terrific Chinese factory report suggests the ASX is short-term overbought and due a retrace to recharge the batteries. If not today, then likely some time next week. Biotechs, small caps and gold stocks underperformed the broader market in the US overnight. The banks, industrials and telecoms were among the best of the sectors.

ECONOMIC NEWS: No significant domestic news scheduled today. Germany releases its closely-watched monthly Ifo Business Climate report tonight. The highlight of a light night ahead in the US for scheduled reports is the monthly durable goods/core durable goods reading.

Good luck to all.