daytrades july 7 pre-market

Morning all, looks like another patchy day ahead with punters torn between a small rise in US stocks and the fear that this will be the last day before a pullback. As usual, we will just trade the trade.

Happy Trades

Morning report courtesy of Commsec

MORNING REPORT
(7am AEST)

The US ISM services index eased from 54.6 to 53.3 in June, below forecasts centred on a result near 54.0. While employment rose slightly and prices paid eased, the new orders sub-component also fell.

The People?s Bank of China has raised interest rates by 25 basis points with the one-year lending rate lifting to 6.56pct and one-year deposit rate up to 3.5 per cent. It was the third rate hike this year.

European shares fell for the first time in eight days as investors responded to Moody?s downgrade of Portugal?s sovereign debt rating. Investors also booked profits before an anticipated rate hike by the European Central Bank. The FTSEurofirst index fell by 0.3pct with the German Dax down 0.1pct and the UK FTSE lower by 0.4pct.

US sharemarkets rose on Wednesday in thin trade with the Dow Jones transport index at record highs. Shares in FedEx rose by 1.3pct with United Parcel Service up 1.0pct. But banking stocks were weaker as investors focussed on Portugal?s rating downgrade. Shares in Bank of America fell by 2.4pct. The Dow Jones index rose by 56pts or 0.5pct with the S&P 500 up 0.1pct and the Nasdaq rose by 8.3pts or 0.3pct.

US longer-term treasuries rose again on Wednesday (yields lower) as global investors preferred US government debt over European issues. A softer reading on the US services sector added support to bond prices. US 2yr yields were steady near 0.43pct and US 10yr yields fell by 2pts to 3.104pct.

The Euro and commodity currencies eased against the US dollar in European and US trade on Wednesday. The Euro fell from highs near US$1.4465 to US$1.4285, ending US trade near US$1.4315. The Aussie dollar fell from highs near US107.30c to US106.55c, ending US trade near US106.85c. And the Japanese yen continued to stick close to 81 yen per US dollar, ending US trade around JPY80.90.

Benchmark crude oil prices were little-changed on Wednesday. Investors weighed up a firmer greenback, the Chinese rate hike, European debt woes and weaker US economic data with a survey suggesting US crude stocks fell last week. US Nymex crude oil fell by US24c or 0.2pct to US$96.65 a barrel and London Brent crude rose by US1 cent to US$113.62 a barrel.

Base metal prices were mixed on the London Metal Exchange on Wednesday as investors weighed up the implications of a Chinese rate hike. Tin rose 1.5pct and nickel rose 0.3pct but other metals eased with zinc down 1.3pct. But the gold price rose again, boosted by safe-haven demand, with Comex gold up by US$16.50 an ounce or 1.1pct to US$1,529.20.

Ahead: In Australia, the June jobs data is released. In the US, the ADP private sector job report is due together with weekly jobless claims. The European Central Bank and Bank of England meet to decide interest rate settings.

Craig James
CommSec Chief Economist