daytrading jan 3 pre-market

Morning traders. Best of the season to all those at the starter's gate this morning. May 2012 be more fruitful and bring fewer challenges than 2011. Many thanks to the posters who took care of this thread last week.

Market wrap:

Stocks have mixed leads for the first session of the new trading year as investors weigh overnight gains in Europe and improved Chinese manufacturing against falls in the US on the last day of 2011.

Australian futures trading has been suspended since the ASX closed on Friday, denying traders their usual guide for today. However, the outlook is brighter this morning than at Friday's US close after strong overnight gains in Germany and France and an unexpected pick-up in China's official manufacturing index.

The US closed the old trading year on Friday with modest falls in thin holiday volume. The S&P 500 fell into the red for the year in the final minutes, losing 0.43% for the day to end 2011 fractionally below its 2010 close. The Dow dropped 69 points or 0.57% but finished the year 5.5% ahead.

Mainland European markets resumed trade overnight with healthy advances as a gauge of German manufacturing topped predictions. The Markit/BME Germany Manufacturing purchasing managers' index improved from 47.9 in November to 48.4, beating an earlier estimate of 48.1. Germany's DAX rallied 3%, France's CAC 1.98% and Italy's FTSE MIB 2.42%. Britain's FTSE was closed. South Korea's Kospi gained 0.03% - other Asian markets were closed.

"German PMI were marginally stronger than expected, and anything better than expected in current market sentiment will lead risk appetite back in markets," the chief economist at FIH Erhvervsbank told MarketWatch. "With low liquidity you have a stronger reaction than usual in equity markets."

Another positive lead for Australian trade came on New Year's Day with the Chinese government's purchasing managers' index for December unexpectedly swinging back into expansion. The government index improved from 49 in November to 50.3 last month, much stronger than the private HSBC reading of 48.7 for the month.

Gold was little changed in overnight trade following a rebound on Friday. The February gold futures contract rallied $26.10 or 1.7% to US$1,567 an ounce on Friday. The spot price initially added to those gains overnight as progress in Iran's nuclear program spurred safe-haven buying. However, the spot price was lately off 90 cents in thin trade at US$1,565.50.

Industrial metals rebounded from two days of falls to close the last session of 2011 with solid gains. In London, copper rallied 1.8%, aluminium 1.3%, lead 1.7%, nickel 2.3%, tin 1.7% and zinc 0.7%. The London Metals Exchange was closed overnight. US copper closed 1.8% ahead on Friday.

Oil eased on Friday in line with US equities. Crude for February delivery fell 59 cents or 0.6% to US$99.06 a barrel.

TRADING THEMES THIS WEEK

EMERGING FROM THE DOLDRUMS: The hardy few trading this week can expect thin trading volumes for at least another week and possibly into the middle of the month, if past years are any guide. Momentum traders will have fewer announcements to spur rallies as many companies remain in a holiday drowse. Scheduled economic news is lighter than usual this week. Chinese and Japanese markets remain closed today, denying ASX traders two of their major leads. However, thin volumes can trigger sharp moves and opportunities will emerge for the patient. (FWIW, last January was one of my most profitable months of the year). Our market looks modestly oversold after last week's declines and just might put in a decent session today.

NEW YEAR, SAME THEMES: Trading this week is again likely to be dominated by improving economic news from the US and the drip-feed of negative signals from Europe. US commentators are optimistic that this week's reports (see "Economic News") will confirm that the US economy ended 2011 on an upswing. Against that, Spain revealed on Friday that its budget deficit has blown out from 6% to 8% and Germany's manufacturing sector continued to contract, albeit at a slower rate.

ECONOMIC NEWS: A predictably thin week for domestic economic news includes the AIG Manufacturing Index at 9.30 am AEST today, year-on-year commodity prices at 4.30 pm today and the AIG Services Index and trade balance on Thursday. Highlights on this week's US schedule include: ISM, construction spending (tonight); factory orders, motor vehicle sales (Wed); weekly jobless claims, ISM services (Thu); and non-farm payrolls, unemployment rate and average hourly earnings (Fri).

Good luck to all.