Daytrading May 26 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Australian shares have mildly negative leads after retreats in European equities and US futures while key overseas markets were closed for public holidays.

The June SPI 200 futures contract dipped four points or 0.1% to 5722 on extremely thin volume, with futures traders reluctant to take positions while trade on the US, UK and German equity markets was suspended overnight.

S&P 500 futures were lately off three points or 0.12% after earlier falling as much as six points as European equities reacted negatively to Greece's debt deadline and an anti-austerity election result in Spain. The Stoxx Europe 6oo slipped 0.29%. France's CAC 40, the largest of the European markets to trade overnight, fell 0.5%. Italy's FTSE MIB dropped 2.09% and Portugal's PSI 20 lost 1.83%

"The Greek debt warning and the Spanish election outcome are weighing on the markets, Naeem Aslam, chief market analyst at AvaTrade, told Reuters.

Greece’s Athex Composite Share index tumbled 3.11% after the country’s interior minister told a TV station the government could not repay EUR1.6 billion to the International Monetary Fund, due between June 5-19. Nikos Voutsis said: “This money will not be given. It does not exist.” Negotiations between Greece and European finance ministers over debt repayments are due to resume tomorrow night.

Spain's IBEX 35 fell 2.01% after voters turned on the ruling pro-austerity party in weekend elections. The ruling ruling People's Party suffered its worst result in 20 years at regional and local elections in what is seen as a troubling sign for the national election in November. Read more here. The euro declined amid fears that the rise of the anti-austerity Podemos party could push Spain down the same road as Greece.

"That would raise the possibility of a Greece-like fiasco in the Eurozone’s fourth-largest economy,” Ilya Spivak, currency strategist at DailyFx.com, told MarketWatch.

The US dollar index was lately up 0.17%. The Australian dollar was this morning buying 78.27 US cents.

The mood in China was significantly brighter, with shares soaring to a new seven-year high yesterday and iron ore extending Friday's rebound. The Shanghai Composite rallied 3.35% yesterday, the index's fifth straight rise after the government announced it will slash import duties on cosmetics, shoes and clothes to boost domestic consumption. Spot iron ore for import to China yesterday jumped $1.20 to US$61.10 a dry ton.

Gold picked up some thin haven-buying despite the rising greenback. Spot gold was lately up $1.10 at US$1,207 an ounce.

News of improved demand from China and Japan helped oil edge higher. Both nations released data yesterday showing increases in imports. West Texas Intermediate crude oil for July delivery was lately up 10 cents or 0.17% in electronic trade at US$59.82 a barrel.
  
Copper fell to a three-week low in China. Shanghai copper for July dropped 1% as strength in the greenback dulled demand. Shanghai nickel declined 2%. Read more here. Trade on the London Metal Exchange was suspended for a public holiday.

TRADING THEMES TODAY

TESTING THE RALLY: The ASX enjoyed an unexpectedly strong start to the week yesterday, taking advantage of market closures in the US and Europe to spring its best session in a month. While the cat's away, the mice will play. The question is whether the rally represented a genuine change in mood and offers a platform for further gains today, or a temporary blip that will be discretely erased before the cat returns tonight. Trade on the SPI was too thin to offer any real clues as to what will unfold today. Most of the overnight developments overseas were mildly negative but on the fringes of what matters here and therefore may be ignored. A partial retrace of yesterday's rally seems the likeliest outcome, but the instos love to trade against retail expectations, so anything is possible.

ECONOMIC NEWS: No significant domestic news scheduled today. Wall Street kicks back to life tonight with April durable goods/core durable goods, consumer confidence, new home sales, a house price index, Richmond Manufacturing Index and the flash services PMI.

Good luck to all.