Daytrading May 12 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Federal budget day looks set to start on a cautious note after ructions on global bond markets helped pull US stocks further from record levels.

The June SPI 200 futures contract eased three points or less than 0.1% to 5571, cushioned by overseas gains in the big two iron ore producers after China reduced rates on the weekend. BHP rallied 0.55% and Rio Tinto 1.67% in US trade. Spot iron ore for import to China yesterday climbed $2 to US$62.50 a dry ton. A separate benchmark, ore with 62% content at Qingdao, advanced 2.6% to $63.02 a dry ton, a two-month high, after rising 9.3% last week.

US stocks turned lower for the first time in three sessions as a sell-off in global bonds resumed. The S&P 500, which closed within two points of a record on Friday, slipped 11 points or 0.51% with all ten sectors under pressure. The Dow lost 86 points or 0.47% and the Nasdaq 10 points or 0.2%.

"You've got a global selling of bonds, not sure of the largest catalyst there," Art Hogan, chief market strategist at Wunderlich Securities in the US, told CNBC. "The disarray in the bond market is causing disarray in the equity market."

With no major economic or corporate news to set the tone, traders took profits from Friday's rally, the largest on the Dow in two months. The spotlight once again swung towards bond markets, where selling picked up as Greek debt talks continued without any sign of resolution. Greece’s Athex Composite index declined 2.51% amid low expectations from the latest meeting of European finance ministers. US treasuries saw their biggest decline in two months, pushing the ten-year yield up 2.3% and the 30-year yield more than 3%. German, Spanish and Greek yields also rose.

Also adding to concerns was a warning from Federal Reserve Bank of San Francisco President John Williams that the Fed could raise its key rate any time if the economic data is strong enough. Williams said the first quarter was not as weak as many commentators seemed to believe and he expected growth to "bounce back" this quarter. His comments resurrected the possibility that the central bank could lift rates as early as next month. Read more here.

The S&P 500 has been stuck in a tightening trading range for the last two months, setting a new high just once.

“The best way to characterise the market right now is trendless volatility,” Kevin Mahn, president of Hennion & Walsh Asset Management in the US, told Bloomberg.

Energy stocks were the biggest drag on the S&P 500, falling 1.88% as oil moved further below US$60 a barrel. West Texas Intermediate crude oil for June delivery settled 14 cents or 0.2% lower at US$59.25 a barrel.

Gold stocks were little changed despite pressure on precious metals from a rising US dollar. The NYSE Arca Gold Bugs index rose 0.17% as gold for June delivery settled $5.90 or 0.5% weaker at US$1,183 an ounce.

Copper declined as traders who had bet on further Chinese stimulus measures took profits following Sunday's rate cut. London copper lost 0.4%, aluminium 0.6%, lead 1.5%, nickel 0.1%, tin 0.6% and zinc 2.1%. US copper for July delivery was recently down 0.3% at US$2.91 a pound.

Most European markets retreated as reports that Greece will be able to make a scheduled debt repayment this week failed to convince traders that there is any end in sight to the long-running crisis. The Stoxx Europe 600 gained 0.24% even as Germany's DAX gave up 0.31%, France's CAC 1.23% and Britain's FTSE 0.24%.

The dollar was this morning buying 78.94 US cents.

TRADING THEMES TODAY

BUDGET BLUES: The ASX looks ripe for an explosive counter-trend rally one of these days, but weak overnight leads and a Federal Budget tonight do not seem to offer the ideal platform. Markets don't like uncertainty and the negative reaction to last year's budget will likely prevent large bets today. Iron ore hit a two-month high on the back of China's weekend rate cut. Incidentally, Goldman Sachs now says you should "short" the rally in iron ore. Close observers of what Goldman says and what Goldman does will form their own opinions on what will happen next. Read more here.  Housing figures are due at 11.30am EST. Profit results are scheduled from CSR and ORI. CCL holds its AGM.

ECONOMIC NEWS: March home loan figures are due at 11.30am EST. The Federal Budget is officially unveiled at 7.30pm. The US is in for another light night of economic data, with highlights including JOLTs job openings, small business index and a speech by a Fed official.

Good luck to all.