Daytrading March 13 pre-market

Morning traders. Thanks Shants and after-market regulars.

Market wrap:

Stocks look set to extend yesterday's gains after Wall Street rallied strongly as weak US retail sales undermined the argument for raising rates.

The March SPI 200 futures contract advanced 13 points or 0.2% to 5859 as market heavyweights BHP and Rio Tinto rebounded in the US. The Australian share market yesterday pre-empted most of the overnight gains in the US with its biggest rally in three weeks.

US stocks snapped back from a run of heavy losses that began when last Friday's employment report appeared to push the Federal Reserve towards a rate hike as early as June. The rates outlook was muddied overnight by weak February retail sales, taking some of the steam out of a rally in the US dollar that threatened profits at US companies that earn most of their profits overseas.   

The S&P 500 bounced 26 points or 1.26%, with nine out of ten industry groups making gains. The Dow added 260 points or 1.47% and the Nasdaq 43 points or 0.89%.

“I think this is a question of the bad news is good news, which is a reversal of what we had Friday when we got killed,” Donald Selkin, chief market strategist at National Securities in the US, told Bloomberg. “The only reason it’s good is in policy because it throws a wet blanket over the surety of them raising rates.”

The US dollar index declined 0.42% from Wednesday night's 12-year high after a report showed retail sales deteriorated for a third straight month during February. Sales dropped 0.6%, confounding economists' expectation that they would revive by 0.3% following a 0.8% fall in January.

Americans paid more for imported goods last month as the price of oil stabilised, according to a separate report. The import price index increased a seasonally-adjusted 0.4%, more than the 0.1% increase predicted by economists. First-time claims for jobless benefits retreated by 36,000 from a 10-month high to 289,000 last week.

Financial stocks including Citigroup and Morgan Stanley were among the stand-outs overnight after passing the latest round of Federal Reserve "stress tests". Of the 31 lenders assessed, 28 were given passes. Santander and Deutsche Bank failed and Bank of America was asked to revise its plans and resubmit. Read more here.

BHP rallied 0.86% and Rio Tinto 0.35% in US trade after spot iron ore for import to China yesterday rebounded 20 cents to US$57.90 a dry tonne. Rio's advance broke an eight-session losing run in the US. BHP had fallen on seven of the last eight US trading days.

US energy stocks closed at a six-week low as oil demand continued to suffer from news of a ninth straight weekly rise in US stockpiles. The energy sector fell 0.64%. West Texas Intermediate crude oil for delivery in April settled $1.12 or 2.3% lower at US$47.05 a barrel, the weakest settlement since late January.

Gold stocks gave back some of Wednesday night's gains after pre-empting the precious metal's first improvement in three sessions. The NYSE Arca Gold Bugs index slipped 0.89%. Gold for April delivery settled $1.30 or 0.1% ahead at US$1,151.90 an ounce.

Most base metals rallied as a falling US dollar made prices more attractive for holders of other currencies and after data yesterday showed Chinese banks loaned more money last month than expected, raising hopes that the economy is strengthening. In London, copper put on 2%, lead 0.5%, nickel 0.9% and zinc 0.7%. Aluminium was unchanged and tin lost 1.2%. US copper for March delivery was recently up 2.1% at US$2.68 a pound.

European stocks pared Wednesday's rally, the strongest since January, as Germany's DAX fell from record levels. The Stoxx Europe 600 lost 0.03% as Germany's DAX eased 0.06%, France's CAC lost 0.22% and Britain's FTSE added 0.59%.

The dollar was this morning buying 77.01 US cents.

TRADING THEMES TODAY

REBOUND CONTINUES: The ASX yesterday pre-empted a strong night on Wall Street and that is what we got. With the timing of the first rate rise dominating US thinking, black is white and white is black where economic data is concerned, so poor retail sales were seen as a market plus. Of course, as was the case on the ASX yesterday, US stocks had pulled back far enough that traders were looking for an excuse to buy and the retail report offered a convenient excuse. The Australian dollar bounced more than a cent overnight as the greenback pared gains. Small caps were again among the out-performers in the US. Financials were also very strong, but for reasons peculiar to the US - stress test results.

ECONOMIC NEWS: No significant domestic news scheduled today. Tonight's US highlights are preliminary consumer sentiment and inflation expectations, and the producer price index/core PPI.

Good luck to all.