daytrading march 1 pre-market

Morning traders.

Market wrap:

A tough night for metals and mining stocks has Australian shares pointed lower this morning following declines on Wall Street and in Europe.

The March SPI 200 futures contract ended the night session 22 points or 0.5% weaker at 4266 after US Federal Reserve Chairman Ben Bernanke quashed investor hopes for more monetary easing, pushing the US dollar higher and sparking profit-taking in alternative stores of wealth. Gold and silver both plunged more than 5%.

US stocks touched their highest level in nearly four years before Bernanke's testimony to Congress curbed expectations of a third round of monetary stimulus. Miners and other stocks exposed to the economic cycle dragged the S&P 500 to if first loss in five sessions, down 0.47%. A 50-point rally on the Dow turned into a 53-point or 0.41% loss. Earlier, the Nasdaq touched 3,000 for the first time since 2000 before declining to 2,967, a fall of 0.67%.

"Chairman Bernanke's semi-annual monetary policy testimony did not provide the 'We're doing QE3' bombshell that at least a few market participants evidently were positioned for," the chief economist of Pierpont Securities in the US told MarketWatch.

Bernanke said the economic recovery in the US remained "uneven and modest" and the job market "far from normal" but he gave no hint of any further plans to stimulate the economy with inflation "subdued". The absence of fresh news helped pushed the US dollar index up 0.75% as investors dumped risk assets for the safety of the greenback.

European markets had been trading higher following the latest round of European Central Bank loans to euro-zone banks, but dropped sharply as Wall Street responded to events in Congress. Britain's FTSE lost 0.95%, Germany's DAX 0.46% and France's CAC 0.05%.

Australia's big miners sagged in US trade as resource stocks copped the worst of the selling. Rio Tinto fell 2.7% and BHP lost 1.1% but Alumina added 2.1%.

An index of US precious metals miners dropped 3.3% as silver and gold plummeted. Gold for April delivery lost $90.10 or 5% at US$1,698.30 an ounce. Silver for March delivery fell $2.59 or 7% to US$34.55 an ounce. Platinum and palladium both fell more than 2%.

"Given that the [US] dollar only rallied by 1%, it follows that the rationale for the sell-off in gold may also be attributed to profit-taking," the chief executive officer at bullion broker Sharps Pixley told MarketWatch. Gold has rallied around 9% since the start of the year.

Oil shrugged off a larger-than-expected increase in US inventories to advance for the first session in three in volatile trade. Crude for April delivery was lately up 32 cents or 0.3% at US$106.87 a barrel.

Copper dropped from a two-month high as the resurgent greenback fuelled a late sell-down on the London Metals Exchange. In London, copper lost 0.9%, lead 2.85%, nickel 1.5%, tin 0.4% and zinc 0.6%. Aluminium was unchanged. US copper was recently down 1.4%.

TRADING THEMES TODAY

RISK OFF: Not a promising lead for our market, with risk assets, especially metals, sold down and the big miners copping it in overseas trade. However, there's no cause for panic. The sell-off in the US was restrained and there were still plenty of investors interested in buying weakness. The best hope for a turnaround today probably lies with the mid-day EST release of Chinese manufacturing figures (see below).

CHINESE MANUFACTURING: The middle of the session in the east brings the release of two indexes of Chinese manufacturing - the official government report at noon and the updated HSBC report at 1.30pm. The government report has been the more bullish of the two lately and is tipped to show a mild improvement from 50.5 in January to 50.9 last month. If that happens, the updated HSBC report will be largely ignored.

ECONOMIC NEWS: A busy session ahead offers manufacturing figures here at 9.30am EST, building approvals and private capital expenditure at 11.30am, rival Chinese manufacturing reports at noon and 1.30pm (see above) and Australian commodity prices at 4.30pm. Europe has an EU economic summit and a raft of economic figures. The US has more testimony from Ben Bernanke, weekly unemployment claims, a manufacturing index, personal spending, personal income, construction spending, manufacturing prices, the price index, natural gas storage and vehicle sales.

Good luck to all.