daytrades june 28 pre-market

Morning traders.

Market wrap: Australian stocks face a tepid start despite a jump in resources prices on Friday as Wall Street ended a difficult week mixed.

The local September SPI futures contract closed 3 points lower at 4414 as Wall Street wrapped up its worst weekly fall since May. A rally in bank and tech stocks helped the S&P 500 and Nasdaq close in positive territory on Friday but the blue chips of the Dow ended underwater. The S&P 500 put on 0.29% on Friday but lost 3.6% during the week. The Nasdaq added 0.27% but lost 3.7% for the week and the Dow dropped 9 points or 0.09% on Friday for a weekly loss of 2.9%.

However, our market may find support this morning from higher resources prices after oil, gold and industrial metals benefitted from another dip in the U.S. dollar, which has been retreating since early June. The U.S. dollar index, which tracks the greenback against a basket of major rivals, lost 0.5% after the government revised down estimates for first-quarter economic growth.

Bank stocks fronted the gains in the U.S. on Friday after Congress watered down a financial reform bill that has been the source of much angst on Wall Street. The legislation will impose new capital requirements on banks and extend oversight of the derivatives market but the most severe provisions were quietly dropped or neutered.

"That's a sigh of relief for the financial services," the head of personal wealth advisors at Eisner told MarketWatch. "[However,] this is the biggest overhaul of financial regulation since the 1930s."

Consumer stocks were the biggest losers on the Dow as investors factored the recent run of deteriorating economic reports in to the outlook for consumer spending. On Friday, the official GDP was revised downwards to accommodate weak consumer spending, but partly off-setting that news was an up-tick in consumer sentiment.

Crude oil futures for August delivery surged more than 3% to $79.19 a barrel as a tropical storm gathering in the Caribbean threatened to head for the Gulf Of Mexico. The closing price was crude's highest since early May.

Gold enjoyed a boom session, ending the week close to a new record as investors sought safe havens ahead of the weekend G20 meeting in Toronto. The spot price closed $12.30 higher than Thursday's New York close at $1,255.70 an ounce.

Industrial metals continued to recover from the multi-month lows of early June, with copper breaking to a one-month high as stockpiles in Shanghai and London both fell. Analysts said there was short-covering on the London Metals Exchange ahead of the G20 meeting in case of surprises. In London, copper rallied 2.7%, aluminium 2%, lead 1.3%, nickel 3.2% and zinc 0.04%.

European markets recorded their first weekly drop in five weeks as the Stoxx Europe 600 index fell for a fifth day. Britain's FTSE slid 1.05%, Germany's DAX 0.73% and France's CAC 1%.


TRADING THEMES THIS WEEK

TAX SELLING VS WINDOW DRESSING: There are two competing crosswinds this week: selling as investors dump poorly-performing shares to off-set losses against gains elsewhere ahead of the end of the local financial year; and end-of-month and end-of-financial-year buying by the big end of town as institutional traders try to drive the market higher to improve their portfolio performance which will in turn determine their bonuses. Although market sentiment was weak last week, there is a reasonable possibility of a small pump on the local market through to the closing bell on Wednesday. If that happens - if - then the odds favour a soft end to the week as some of those "pump" positions are quickly unwound.

SLIDING U.S. DOLLAR: The recent retreat in commodity prices bottomed somewhere around June 9/10, about the time the U.S. dollar index peaked and began a slow but steady decline. A lower U.S. dollar makes commodities priced in dollars more attractive to foreign buyers, so there tends to be an inverse relationship between the two. Copper, sometimes called the "metal with the degree in economics", marked a technical break higher on Friday, which bodes well for other base metals. Oil finished the week strong and gold was close to a record high. These are all positive signs for the local market after last week's sell-off. Bounce?

ECONOMIC NEWS: The local diary is once again quiet until Wednesday's private sector credit and new home sales and then Thursday's building approvals, retail sales and annual commodity prices. Tonight in the U.S.: personal spending and income and the monthly core price index. The main indicators this week are: consumer confidence (Tue); non-farm employment (Wed); unemployment claims, home sales and manufacturing (Thu); and unemployment rate and official non-farm employment (Fri).

Good luck to all.