Daytrading March 6 pre-market

Morning traders. Thanks Shants and after-market regulars.

Market wrap:

Shares look set for a steady start as modest gains on Wall Street offset a slump in iron ore below US$60 a tonne.

The March SPI 200 futures contract edged up four points or less than 0.1% to 5894 as US stocks closed ahead for the first time in three nights following a choppy, directionless session.

Merger activity helped offset weak economic data and a tepid reaction to the launch details of quantitative easing in Europe. The S&P 500 closed two and a half points or 0.12% higher with health care and biotechs leading the way after deal news between Pharmacyclics and AbbVie, and Mallinckrodt and Ikaria. The Dow rallied 39 points or 0.22% and the Nasdaq 16 points or 0.32%.

A European Central Bank announcement that it will start buying sovereign bonds on Monday boosted European shares but did little to lift risk appetite on the other side of the Atlantic following a downbeat round of economic data. The S&P 500 traded either side of break-even in a narrow nine-point range.

"People are taking a wait-and-see approach ahead of the jobs report [tonight]," Paul Brigandi, managing director of portfolio management at Direxion Funds in the US, told Reuters.

First-time claims for unemployment benefits unexpectedly lurched higher last week to 320,000, the highest level in ten months, from 313,000 the week before. Economists expected claims to fall to a seasonally-adjusted 301,000. The four-week moving average moved above 300,000 to 304,750 for the first time since mid-January. Factory orders declined 0.2% in January, their sixth straight monthly fall but ahead of expectations for a loss of 0.3%.

The ECB announced its QE bond-buying program will start on Monday as it raised its growth expectations for this year to 1.5% from a December prediction of 1%. The central bank is expected to buy up to 850 billion euros worth of government bonds between now and September. Read more here. The news helped drive the Stoxx Europe 600 up 0.81% as Germany's DAX added 1%, France's CAC 0.95% and Britain's FTSE 0.6%.

The Nasdaq Biotech Index rallied 2.22% to a new record high. The index has recorded double-digit gains for each of the last six years.

Australian iron ore giants BHP and Rio Tinto missed the market rally as iron ore tumbled to a six-year low after China vowed to close steel mills for environmental reasons. Spot iron ore for import to China yesterday fell $2.80 or 4.7% to US$59.30 a dry tonne, the Australian benchmark's lowest level since early 2009. Read more here. BHP lost 1.34% and Rio Tinto 1.32% in US trade.

Gold dropped below US$1,200 an ounce to a two-month low as the US dollar rallied against the euro. Gold for April delivery settled $4.70 or 0.4% lower at US$1,196.20 an ounce.

Oil gave back most of Wednesday night's rally as traders turned their attention to rising US stockpiles. West Texas Intermediate crude oil for delivery in April settled 77 cents or 1.5% lower at US$50.76 a barrel.
  
Most base metals rallied overnight amid optimism that China will introduce more stimulus measures to boost growth. In London, aluminium gained 0.1%, lead 2.6%, nickel 1.8% and tin 1.9%. Copper lost 0.1% and zinc 0.5%. US copper for March delivery was recently off 0.1% or a third of a cent at US$2.67 a pound.

"The markets are up because it's hope over reality," Robin Bhar, head of metals research at Societe Generale, told Reuters. "The reality is that China is slowing and the hope is that as it slows there has to be more accommodation in terms of fiscal, monetary moves for stimulus."


The dollar was this morning buying 77.73 US cents.

TRADING THEMES TODAY

SIDEWAYS DRIFT CONTINUES: The ECB's QE program was well-flagged, so Wall Street yawned and twiddled its thumbs last night. The main interest there is tonight's employment report, which is likely to be one of those 'looking glass' events where a poor report is market-friendly (creating a potential delay in rate rises) and a strong result is seen as a negative. The ASX has drifted lower this week but recovered nicely yesterday and may find some support today from a lower currency - lately the market seems to rally when the dollar is weak. Overseas buyers taking advantage of a cheaper entry? Iron ore is likely to be the biggest headwind following an ominous break below US$60 round-number support. The juniors will likely cop the hardest hits.  

ECONOMIC NEWS: The AIG Construction Index is due at 9.30am EST. Tonight's US highlight is the February employment report and unemployment rate. Also due: trade balance, average hourly earnings and consumer credit.

Good luck to all.