Morning traders.Market wrap: Losses for local miners in overseas...

Morning traders.

Market wrap: Losses for local miners in overseas trade on Friday following further monetary tightening in China suggest a negative start for the share market this morning.

The March SPI futures contract closed 12 points or 0.24% weaker on Saturday morning at 4910. Resource stocks, including BHP and Rio Tinto, were sold off in the US and UK after China moved to cool inflationary pressures by raising bank reserve requirements by half a percentage point.

The falls in resource stocks overshadowed an otherwise bright end to the week overseas, with US stocks advancing to new 32-month highs on Friday, silver hitting a 31-year high and industrial metals rallying despite China's move.

Another round of solid company earnings reports pushed the S&P 500 to its highest close since June 2008, up 0.19% for the day and 1% for the week. The Dow added 73 points or 0.59% on Friday for a third winning week and the Nasdaq rallied 0.08%.

"Earnings have come through spectacularly," a manager at Fiduciary Trust in the US told Bloomberg. "Everything from a fundamental standpoint feels as good as it's felt in quite some time."

The materials sector was the biggest drag as traders fretted that China's attempt to curb inflation will end in a hard landing for the economy. Rio Tinto fell 2.35% in US trade, BHP 1.6% and Alumina 1.1%.

Silver was the pick of the metals, rising nearly 8% last week as protests in the Middle East encouraged safe-haven buying. Silver for March delivery rallied 73 cents or 2.3% on Friday to $32.29 an ounce, the highest close since 1980.
April gold advanced for a fifth session, rising $3.50 or 0.25% to $1,388.60 an ounce.

"The metals markets are sprinting toward new highs and breaking through key resistance not seen for a very long time, especially in silver," the editor of Kerr Commodities Watch told MarketWatch. "Widespread unrest in the Middle East and elsewhere, as well as growing inflation concerns globally, are pushing more and more investors into the precious metals as a hedge."

Industrial metals quickly rebounded from a brief wobble after China's latest move to rein in demand. Zinc hit a three-month high after under-performing other metals last year. In London, copper rallied 0.5%, aluminium 1.8%, lead 2.3%, nickel 2.1%, tin 1.9% and zinc 1.3%.

Oil closed mixed ahead of tomorrow's contract expiry. Oil for March delivery eased 16 cents or 0.2% to $86.20 a barrel, but the April contract rallied 87 cents or 1% to $89.71.

The major European markets closed little changed as falls in mining stocks capped index gains. Britain's FTSE slipped 0.07%, Germany's DAX added 0.29% and France's CAC was up 0.12%.

TRADING THEMES THIS WEEK

CHINA COOLS LENDING: Wall Street shrugged off news on Friday that China's central bank has raised bank reserve requirements by half a percentage point. Our resource stock-heavy market may not be so lucky today after our big miners were sold off in UK and US trade. Much will depend on how the Shanghai Share Index responds to the news when it opens later this morning. China's benchmark share index has been strong this month, suggesting the market is increasingly sanguine about interest rate rises and rising bank lending ratios.

MIDDLE EAST ABLAZE: How long can world markets ignore the growing "people's revolution" in North Africa and the Middle East? Morocco and Libya are new flash-points as calls for democratic change spread through the Arab world. Precious metals have been the obvious play so far for local investors looking for a hedge or a way to trade developments. Oil has been stubbornly resistant, in part because the unrest has yet to disrupt the region's major producers. That may change in the days ahead as the protest movement gains in confidence.

PRESIDENT'S DAY HOLIDAY: Wall Street is closed tonight for a public holiday. Our market tends not to move too far without a lead from the US, so we may not see any significant moves here until the middle of the week.

ECONOMIC NEWS: All the local news comes on Wednesday and Thursday this week: Reserve Bank Governor Glenn Stevens delivers a speech titled "Australia and the Resources Boom" at 9 am in Melbourne on Wednesday, followed by quarterly construction work and the wage price index at 11.30 am; Thursday brings the monthly leading index and quarterly private capital expenditure. US markets are closed tonight for a public holiday. The week's highlights include: consumer confidence (Tue); existing home sales (Wed); jobless claims, durable goods orders, new home sales (Thu); and GDP and consumer sentiment (Fri).

Good luck to all.