daytrades april 29 pre-market

Morning traders.

Market wrap: A cautiously positive start to local share trade is likely after a sixth losing night for the US dollar fuelled rallies in resources and US equities.

The June SPI futures contract ended the night session 9 points or 0.18% stronger at 4882 but was held back by modest losses for Australian miners in US trade and a fifth straight negative session for Shanghai shares yesterday.

The major US share indexes rallied late in the session to close near three-year highs as quarterly company earnings overshadowed evidence that the US economic recovery is slowing. The S&P 500 advanced 0.36% and the Dow put on 72 points or 0.57%. The Nasdaq added 0.09% to Wednesday's 10-year high.

The US dollar index, which ranks the greenback against six major currencies, slumped towards a three-year low after US GDP and weekly jobless claims missed expectations. Growth slowed to 1.8% last quarter from a rate of 3.1% at the end of last year as government spending declined. Jobless claims jumped to their highest weekly level since January.

"We're all reacting to the numbers and looking for sustainable growth," the head currency trader at Bank of Montreal told Bloomberg. "The dollar weakness is a trend that's hard to break. The momentum we did seem to be having in the US economy seems to be hitting some headwinds. Best case scenario: the US economy is lukewarm."

The Australian dollar continued to benefit from weakness in the US unit and bullishness towards commodities, recently buying US $1.0929. However, Australian miners missed the overnight rally in US shares following yesterday's 1.3% fall in the Shanghai Composite, the index's fifth straight loss as investors fret about the possibility of another interest rate rise this weekend. In US trade, Rio Tinto fell 0.7%, BHP 0.1% and Alumina 1.5%.

Precious metals continued to provide a refuge from the sliding greenback. Gold hit another record, with metal for June delivery recently up $18.90 or 1.25% at US $1,536 an ounce. May silver drew ever closer to the 1980 record high of US $50.35, touching $49.52 an ounce overnight and recently trading $2.54 or 5.5% higher at $48.50 an ounce.

Industrial metals, priced in US dollars, benefitted from overseas buying interest despite further evidence of slowing demand. In London, copper rallied 0.6%, aluminium 0.8%, lead 0.5%, nickel 0.9%, tin 0.6% and zinc 1%. US copper was recently up 0.6%.

"The steady rise in copper, zinc and lead inventories is a prime cause for concern," Commerzbank said in a note quoted on Reuters. "If the increase in stocks is not halted soon, the upbeat view taken so far of this year's copper market balance - a large shortfall in supplies - may have to be revised, with the corresponding adverse impact on prices."

Oil was flat but hovering near its highest level since September 2008. Light sweet crude for June delivery was unchanged at US $112.76 a barrel.

European markets continued to be supported by solid corporate earnings. Britain's FTSE advanced 0.03%, Germany's DAX 0.95% and France's CAC 0.91%.

TRADING THEMES TODAY

CAUTION PREVAILS: Futures traders are taking a cautious view of today's prospects despite solid overnight gains in US shares and most resources that matter to our market. There are three obvious reasons: our big miners lost ground in US trade overnight, Shanghai has fallen for five straight sessions and yesterday's local trade hinted that the strong local currency is becoming a short-term negative for shares (see below).

CURRENCIES: It's all about money-flow at present. Those of us who make a living from the stock market sometimes forget that shares are a relatively small part of the overall investment complex. For institutional investors, shares are just one possible asset among a range that includes government bonds, currencies, commodities, bank deposits, precious metals and more. Right now money is flowing from the US dollar into gold, silver, US equities and the Australian dollar. That's supporting Wall Street and commodity prices. However, there were signs yesterday that overseas investors in Australian shares are taking advantage of the strong Aussie dollar to lock in profits ahead of a long-expected downturn when US interest rates start to rise some time after June. That partly explains the relative under-performance of our market recently and unfortunately suggests it's likely to continue for a while yet. Another important factor coming into play yesterday was the destructive impact of a strong Australian dollar on companies that earn much of their income in US dollars. That is likely to feature again today, offering shorting opportunities for short-term traders and potential bounce opportunities (eventually) for the brave.

ECONOMIC NEWS: Monthly private-sector credit figures are due at 11.30 am. Chinese manufacturing data is due at 12.30 pm. Japanese and British markets are closed today for bank holidays. Tonight's US schedule includes personal spending, personal income, the Chicago PMI, revised consumer sentiment and inflation expectations, core price index, employment cost index and a speech by Federal Reserve chairman Ben Bernanke.

Good luck to all.