daytrades may 16 pre-market

Morning traders.

Market wrap:

A soft start to local trade is likely after US stocks weakened on Friday and commodities were mixed as the US dollar rose rallied.

The June SPI futures contract closed 35 points or 0.74% off on Saturday morning at 4678, suggesting the market will open near an eight-week low this morning.

US stocks closed lower for a second straight week following disappointing earnings reports from the tech sector and some nerves ahead of meetings this week on Greece's debt problems. The S&P 500 lost 0.81% on Friday and 0.2% for the week as risk aversion continued to dominate trade. The Dow dropped 100 points or 0.79% on Friday and 0.3% for the week and the tech-heavy Nasdaq 1.21% on Friday.

"You're seeing liquidity drain off - people have had a good year so far and rather than get tagged for staying too long at the party, they're exiting," a senior portfolio manager at Huntington Asset Advisors in the US told Bloomberg. "With all the liquidity out there needing a home, it's a tug of war back and forth between inflation fear and a need to keep that money invested."

US inflation remained at elevated levels, according to data released on Friday showing fuel expenses driving consumer prices up 0.4% last month. Consumer confidence improved despite the rising cost of living, with an index reaching a three-month high this month.

Financials was the weakest of the S&P 500's 10 sectors, falling 1.5% as the House of Representatives introduced three bills to amend existing consumer protection laws. The best-performing sectors were both defensive: health and consumer staples.

European debt jitters ahead of meetings this week on Greece's debt burden sent the euro to a six-week low against the US dollar. A German newspaper reported major divisions between European leaders over how to address Greece's problems. The US dollar index, which ranks the greenback against six major currencies, rallied nearly 0.7% on Friday.

Commodities were choppy, with an afternoon rally dragging oil higher. Light sweet crude for June delivery ended 68 cents or 0.7% stronger at US $99.65 a barrel after falling as low as $95.25 on Thursday.

Precious metals were mixed but little changed. Gold for June delivery dropped $13.20 or 0.9% to US $1,494.20 an ounce, while July silver added 22 cents or 0.6% to $35.34 an ounce.

Copper benefitted from strong GDP numbers from Germany and France but other metals were crimped by the rising US dollar. In London, copper rallied 1% and zinc 1.6%. Aluminium fell 1.6%, lead 0.5%, nickel 0.5% and tin 2.05%. US copper rallied 0.3%.

The major European markets wilted as Wall Street's weakness undermined initial enthusiasm for growth in France and Germany. Britain's FTSE eased 0.32%, Germany's DAX 0.55% and France's CAC 0.11%.

TRADING THEMES THIS WEEK

COMMODITIES FINDING A FLOOR?: Much of the weakness in our market over the last five weeks can be attributed to deteriorating prices for raw materials, which in turn are partly attributable to currency movements. There were signs of stability returning towards the end of last week, with oil managing its best weekly gain since March and copper, an economic bellwether, ending the week flat. Traders waiting for the right time to re-enter will be starting to pay more attention.

GREEK TRAGEDY: European leaders are due to meet this week to discuss Greece's deteriorating debt crisis. Their task grew tougher over the weekend with the arrest in New York of the chief of the International Monetary Fund, Dominique Strauss-Kahn, a notable supporter of Greece's reform package and a friend of the Greek Prime Minister. The US dollar opened stronger this morning, suggesting further pressure on the embattled euro this week. In recent times, a rising US dollar has been negative for commodities and US stocks.

ECONOMIC NEWS: A solid local schedule this week includes: monthly home loans, new vehicle sales (11.30 am today); the minutes from the last Reserve Bank meeting (tomorrow); consumer sentiment, wage price index (Wed); and inflation expectations (Thu). The US is short on market-moving economic indicators this week, but highlights include: the Empire state index, home builders' index (tonight); housing starts, industrial production, capacity utilisation (tomorrow); weekly jobless claims, existing-home sales, leading indicators and Philly Fed (Thu).

Good luck to all.