daytrades may 10 pre-market

Morning traders.

Market wrap: Shares are set for a flat start as a sharp rise in the dollar and pre-Budget jitters offset gains on Wall Street and a big rebound in commodities.

The June SPI futures contract ended the night session 3 points or 0.06% weaker at 4761 as futures traders decided our market pre-empted most of the overnight moves yesterday.

Energy and mining stocks steered Wall Street higher as commodities bounced back from their worst weekly performance since 2008. The S&P 500 rallied for a second day, rising 0.45% after McDonald's beat sales estimates. The Dow put on 46 points or 0.36% and the Nasdaq 0.56%.

"Commodities look oversold as we get more evidence that the economy is rebounding," a manager at Oakbrook Investments in the US told Bloomberg. "The jobs report we got on Friday and McDonald's sales provided further evidence that the recovery is in place. The equity market is in a reasonable position given where earnings are."

US traders shrugged off a credit downgrade for Greece which earlier rattled European markets. Britain's FTSE dropped 0.57%, Germany's DAX 1.09% and France's CAC 1.25% after Standard & Poor's cut its ratings on Greek bonds as concerns mount about Greece's capacity to honour its debts.

Commodity prices added to gains late in the session as a brief rally in the US dollar fuelled by euro concerns faded. The US dollar index was recently down 0.3%, making dollar-denominated commodities cheaper for holders of other currencies. The Australian dollar has rallied nearly a cent in the last 24 hours, recently buying US $1.081.

Oil snapped a five-session losing run, with light sweet crude for June delivery bouncing $5.77 or 5.9% to US $102.95 a barrel.

Silver surged more than 7% and gold pushed back through US $1,500 as European debt woes revived "safe haven" buying. Silver futures for July delivery were recently ahead $2.55 or 7.2% at US $37.83 an ounce. June gold rose $21.80 or 1.5% to US $1,513.40 an ounce.

Industrial metals also staged a partial rebound, but gains were capped by uncertainty over this week's pending Chinese economic data and rising inventories. In London, copper added 0.7%, aluminium 0.4%, lead 1.1%, tin 0.5% and zinc 1.55%. Nickel eased 0.1%. US copper was recently up 2%.

"The next batch of Chinese economic data due out over the next two days will... be vital, particularly in terms of trying to gauge the effectiveness of the Chinese tightening measures," Standard Bank said in a note quoted on Reuters. "A combination of high inflation and lower-than-expected growth looks like being the worst option and would likely trigger further weakness."

TRADING THEMES TODAY

UNCERTAINTY RULES: Futures traders aren't confident about the prospects for today and nor am I. There were too many competing forces in the overnight action, summed up by the fact BHP and Rio Tinto fell in UK trade but rallied in the US. On the plus side of the ledger are overnight gains for US stocks and commodities; on the negative side, losses in Europe and a big rise in the Australian dollar (recently a major drag on our market). Add the uncertainty over what Chinese economic reports today and tomorrow will reveal, plus tonight's Federal Budget, and it's unlikely we'll see much of a move today until the outlook is clearer.

COMMODITIES REBOUND: Bottom-pickers active over the last two trading sessions should prosper today after a sharp overnight recovery in oil, gold and silver. Industrial metals also improved but the gains were relatively muted as traders await the release of Chinese data today and tomorrow that will likely determine the near-term direction for those markets.

ECONOMIC NEWS: Trade balances are the theme for the day, with Australian data due at 11.30 am and Chinese figures scheduled for release sometime today (no time specified). The Federal Government releases the budget at 7.30pm tonight. A relatively light schedule tonight in the US includes import prices, wholesale inventories and economic optimism.

Good luck to all.