daytrades april 18 pre-market

Morning traders.

Market wrap: Shares are likely to start the week stronger as traders weigh solid gains in US stocks and resources on Friday against further Chinese monetary tightening over the weekend.

The June SPI futures contract closed 16 points or 0.33% higher at 4879 on Saturday morning after positive US economic news helped Wall Street rally. However, the People's Bank of China has since hiked bank reserve requirements, the latest step in its campaign to rein in inflation.

Wall Street pared a second week of losses on Friday after positive economic data outweighed more disappointing earnings reports. The benchmark S&P 500 gained 0.39% on the day but lost 0.6% over the week. The Dow added 57 points or 0.46% on Friday and the Nasdaq 0.16%.

US consumer confidence topped expectations, a regional manufacturing index advanced to a one-year high and core consumer prices increased a modest 0.1% last month. The meek March inflation reading eased pressure on the Federal Reserve to scrap its bond-buying program, which has helped fuel the stock market's recovery from the depths of the GFC.

"The bottom line is that the good economy and cheap money will continue to bolster the stock market," Peter Cardillo, chief market economist at Avalon Partners in the US told MarketWatch.

Precious metals traders took a less benign view of global inflationary pressures, driving gold and silver to new highs. Gold for June delivery rose $13.60 or 0.9% to close at a record high of $1,486 an ounce. May silver hit a new 31-year peak, rising 91 cents or 2.2% to $42.57 an ounce.

Oil was boosted by the upbeat tone of US economic reports, ending a losing week with a third day of gains. Light, sweet crude for May delivery rallied $1.55 or 1.4% to $109.39 a barrel.

Copper fell for a fifth session but other industrial metals recorded gains as traders continued to fret about a potential slowdown in Chinese demand. In London, copper and zinc both lost 0.3%, while aluminium rallied 1.5%, lead 1.4%, nickel 1.5% and tin 2.4%.

"The market is gradually getting a little bit more worried about what Chinese growth is going to look like over the medium term because of the ongoing tightening," a senior commodity strategist at Societe Generale told Reuters. "Growth is going to slow down quite significantly. It's going to be very bumpy."

Over the weekend, China ordered its banks to increase their reserves to 20.5%, reducing the amount of money available to lend to borrowers. The move came after inflation hit 5.4% last month.

TRADING THEMES THIS WEEK

US EARNINGS: A fifth of the S&P 500 are due to report this week, delivering a clearer picture of a quarterly earnings season that delivered its share of disappointments during its first week. Alcoa ended the week 7.8% weaker, Google down 8.2% and Bank of America off 4.9%.
Bloomberg says "the proportion of companies beating forecasts has fallen [for] three straight quarters", reflecting a rising benchmark as the economic recovery since the GFC matures. On the plus side, Wall Street ended last week only modestly lower, suggesting any gap between expectations and earnings is not yet too significant.

CHINESE TIGHTENING: China's war on inflation continued over the weekend with the fourth hike in bank reserve requirements this year. The nation's leaders have identified reducing inflation as the government's "top priority", suggesting further interest rate rises are likely to follow soon. Read more here. The effect of the increase in rhetoric has already been seen on Dr Copper, the "metal with the degree in economics", which has fallen for the last five sessions. Industrial metals prices are likely to remain under pressure this week.

EASTER LONG WEEKEND: Trading in the second half of this week is likely to be overshadowed by this year's unusually long five-day Easter/Anzac break. US stock exchanges only close for Good Friday, meaning there will be two full sessions overseas before trading resumes here next Wednesday. That may see local traders err on the side of caution, reducing their exposure on Wednesday and Thursday.

PRECIOUS METALS: No cracks yet in the latest up-legs in gold and silver. Inflationary pressures around the globe remain strong and metals remain an obvious hedge.

ECONOMIC NEWS: A shortened local schedule this week includes: quarterly business confidence numbers, minutes from the last Reserve Bank meeting (tomorrow); monthly leading index, quarterly import prices (Wed); and the quarterly producer price index (Thu). This week's key numbers in the US are likely to be: the home builders' index (tonight); housing starts (tomorrow); existing home sales (Wed); and weekly jobless claims, leading indicators and the Philly Fed (Thu).

Good luck to all.