daytrading dec 10 pre-market

Morning traders.

Market wrap:

The Australian share market has a 17-month high in its sights this week after strong Chinese economic data released over the weekend added to mostly positive leads from Wall Street.

The December SPI 200 futures contract rallied six points or more than 0.1% on Saturday morning to 4566 amid caution as the XJO nears the 2012 closing high of 4571 set in October.

Most US stocks pushed higher on Friday as jobs data beat expectations, offsetting softening consumer sentiment as a budget stalemate in Washington continued. The S&P 500 edged up 0.29% for a third week of gains, its best run since August. The Dow jumped 81 points or 0.62%, while the Nasdaq lost 0.38%, thanks mainly to a 2.56% drop in Apple.

The unemployment rate in the US fell to 7.7% from 7.9% after the economy created 146,000 jobs last month, nearly twice the number economists expected. The jobless rate was the best since December 2008, but the decline was more due to a decline in participation than jobs growth. Read more here.

The market pared gains after preliminary consumer sentiment figures for December suggested the fiscal cliff debate is starting to undermine public opinion. The University of Michigan-Thomson Reuters consumer sentiment index slumped to 74.5 from 82.7 last month, well below expectations.

The decline in sentiment came as Democrats and Republicans maintained their public sparring over budget talks on Friday. Republican House Speaker John Boehner claimed once more that there had been no progress in negotiations with the White House, while Democrat House Minority Leader Nancy Pelosi said the Republican party could advance the process by passing a bill that extends tax cuts for all but the top 2% of earners.

"There is a lot of confusion and there are a lot of cross currents here to consider," a money manager at National Penn Investors Trust in the US told Bloomberg. "Unemployment has improved, yet confidence deteriorated. How do you explain the market isn't doing anything when Boehner comes out and says [fiscal cliff talks are] nowhere? It seems like the market should have been going down, but the fact it's not tells me that the market wants to go higher."

A raft of fresh data released yesterday pointed to a rebound in the Chinese economy following nearly two years of contraction. Industrial production and retail sales both exceeded economists' predictions and inflation was benign. Read more here.

Most European markets edged higher despite slowing industrial production data and a downbeat outlook from Germany's central bank. The Bundesbank cut its growth estimate for next year to 0.4% from 1.6% and warned unemployment would rise. Germany's DAX lost 0.22%, France's CAC added 0.12% and Britain's FTSE put on 0.21%.

Commodities were mixed as the US dollar edged higher. Oil initially spiked after the US employment numbers, but eventually sagged to a loss of 3.4% for the week. West Texas crude for January delivery gave up 28 cents or 0.3% on Friday to US$85.98 a barrel.

Gold inched higher as the stalemate in Washington encouraged haven buying. Gold for February climbed $4.10 or 0.2% to US$1,705.90 an ounce.

Copper bucked a generally soft session for industrial metals as the strengthening greenback offset the US employment surprise. US copper for December delivery put on two cents or 0.5% to US$3.66 a pound. In London, copper advanced 0.4%, while aluminium lost 0.6%, lead 1.1%, nickel 1.85%, tin 0.8% and zinc 0.1%.

TRADING THEMES THIS WEEK

WASHINGTON'S PHONEY WAR: Top of the agenda for the week once again is the budget stand-off in Washington, where political rivals will continue to squeeze as much leverage out of the situation before eventually reaching a compromise that satisfies no one. A compromise deal could come any time, but recent history suggests it's likely to be last minute. Wall Street has been factoring in some sort of deal over the last few weeks and so has the XJO. Unless the bickering turns serious, there's a good chance Australian shares will hit a new 17-month high this week.

FED SEARCHES FOR GROWTH: The Federal Reserve will be back in the spotlight this week as it meets to consider additional stimulus for the stubbornly slow US economy. The looming expiry of the Operation Twist bond-buying program is expected to lead straight into a new stimulus program, likely built around some sort of asset buying. The Fed meets on Tuesday and Wednesday, with an announcement due on Wednesday night our time. Read more here.

CHINESE RECOVERY: The outlook for Australian miners and commodity prices improved over the weekend after China released more data that pointed to a rebound in the economy. November industrial output and retail sales both topped expectations, and electricity production, seen by some as the most reliable gauge of economic activity, increased by 7.9%. The Shanghai Composite, which slumped to a four-year low last month, surged 4.1% last week and may steer our market higher this week. The Chinese economic calendar this week includes trade balanced today (exact time uncertain), loans and money supply data tomorrow and flash manufacturing figures on Friday.

ECONOMIC NEWS: This week's Australian highlights include: home loans (11.30am EST today); business confidence (tomorrow); consumer sentiment (Wed); and inflation expectations, motor vehicle sales (Thu). Highlights in the US include: trade deficit (tomorrow); import price index (Wed); weekly jobless claims, retail sales, producer price index/ core PPI, inventories (Thu); and consumer price index/core CPI and industrial production (Fri).

Good luck to all.