daytrades feb 25 pre-market

Morning traders.

Market wrap: A sharp reversal in US stocks as the price of oil fell was not quite enough to set up the Australian share market for a first positive start in six days.

The March SPI futures contract ended the night session 14 points or 0.29% weaker at 4778 after a volatile night on world markets. A precipitous plunge in oil from near US$100 a barrel back under $96 helped Wall Street pare early losses but the major indexes finished mixed.

The benchmark S&P 500 breached the 1,300 support level but rebounded strongly late in the session to close just 0.1% weaker at 1,306. The Dow turned a 100-point fall into a loss of 38 points or 0.31%, while the Nasdaq rallied 0.55%.

Sentiment in the US was boosted by improving consumer confidence and jobless claims and a rise in durable goods orders after three monthly declines. However, sales of new homes were weak, corporate earnings were mixed and attention remained focused on Libya and the surging oil price.

"We're certainly watching a battle between nerves and economic fundamentals," the chief investment strategist at the private-banking unit of KeyCorp in the US told Bloomberg. "For the most part, economic data points in the US have been good. The focus will be on oil, rumours and their implications. At this stage, I believe there's a perception that the situation is not good, but there are things that could keep it from getting worse."

Oil spent most of the session near 28-month highs around US$100 a barrel before a sudden plunge following reports that Algeria has lifted its decades-old "state of emergency" restrictions. The news helped soothe concerns that Arab leaders were helpless to contain the civil unrest that has spread across North Africa and the Middle East in recent weeks. Crude futures were recently down $1.64 or 1.7% at $96.46 a barrel.

The news sparked a sharp sell-off in precious metals as traders rotated back into equities. Gold was recently off $15 or 1.1% at $1,399 an ounce after earlier setting a fresh seven-week high. March silver slumped $1.31 or 4% to $31.99 an ounce.

Copper rebounded off four-week lows and aluminium rallied but other metals fell in London trade. Copper added 0.95% and aluminium 0.4%. Lead fell 1.4%, nickel 3.2%, tin 0.4% and zinc 0.8%. US copper was recently up 1.3%.

"Zinc, lead and nickel are the metals with the worst fundamentals and are getting sold more aggressively during this risk-aversion period," RBS analyst Daniel Major told Reuters.

The major European markets weakened for a fifth session but pared losses before the close. Britain's FTSE fell 0.06%, Germany's DAX 0.89% and France's CAC 0.09%.

TRADING THEMES TODAY

HINT OF A REVERSAL: An overnight session of wild swings offers hope to the bulls and signs of change in this week's trading themes. Oil plunged, dragging precious metals with it, and US equities staged a big turnaround. A positive finish would have been great but we didn't quite get that. Bullish traders may start to rebuild positions today but I'd like to see a sustained retreat in the oil price first. The Algerian news seemed a pretty weak excuse for the sell-off in oil but it shows how skittish markets are just now. The oil price is most likely the key to today's direction on our share market. If oil keeps falling, this could be our reversal day.

ECONOMIC NEWS: Nothing significant scheduled here today. Japanese inflation figures are due at 10.30 am. Preliminary quarterly GDP figures are the main interest tonight in the US. Also due: the preliminary quarterly GDP price index, revised consumer sentiment and revised inflation expectations.

Good luck to all.