daytrades may 3 pre-market

Morning traders.

Market wrap: Shares are set to open lower this morning after initial gains on Wall Street evaporated and oil, precious metals and Australian miners declined in overseas trade.

The June SPI futures contract ended the night session 21 points or 0.44% off at 4798 as US investors used euphoria over the death of Osama Bin Laden as an opportunity to lock in profits after two weeks of virtually unbroken advances.

"While the public and talking heads were celebrating, the market did its own thing and turned it into a classic 'sell on the news'," Elliot Spar, market strategist at Stifel, Nicolaus wrote in a note quoted on MarketWatch. "The market has been working its way higher almost uninterrupted for the last eight sessions so it was a convenient excuse to take some off the table."

Falls in energy stocks and precious-metals miners helped drag the S&P 500 to a loss of 0.18%. A 70-point gain on the Dow turned into a 3-point or 0.03% deficit by the close and the Nasdaq dropped 0.33% after a major computer chip-maker was downgraded.

Also weighing on sentiment was evidence of moderate cooling in manufacturing in the US, following a weak reading from China over the weekend. A US manufacturing index eased to 60.4 last month from 61.2 in March, but stayed well above the 50-point level that marks expansion. China's purchasing managers' index cooled from 53.4 in March to 52.9 last month, below expectations.

Demand for oil was crimped by a skinny rise in the US dollar, the moderation in US manufacturing and a reduction in the 'risk premium' associated with terrorism following Bin Laden's death. Crude for June delivery was recently down 95 cents or 0.8% at US $112.98 a barrel.

Silver suffered heavy losses after the margin requirements for traders using the main US metals futures exchange were hiked for the second time in a week. Silver for July delivery tumbled as much as 13% and was recently off $4.64 or 9.6% at $43.95 an ounce on the New York Mercantile Exchange. Analysts debated the significance of the margin change, with some attributing the volatility to speculators abandoning the market and others saying the changes were irrelevant. Read more here.

Gold set a new intraday record in early trade but declined as the US dollar inched higher. Gold for June delivery was recently off $10.70 or 0.7% at US $1,545.70 an ounce.

The major industrial metals markets in London and Shanghai were closed overnight but US copper gave up initial gains as the greenback turned higher and US stocks declined. Copper for July was recently off 0.1% at US $4.175 a pound.

In US trade, BHP fell 1.1%, Rio Tinto 1.2% and Alumina 1.8%.

The major European markets moderated gains following Bin Laden's death as the initial euphoria on Wall Street began to wane. Britain's FTSE added 0.03%, Germany's DAX 0.18% and France's CAC 0.05%.

TRADING THEMES TODAY

OSAMA EUPHORIA EVAPORATES: The US public may have celebrated hard, but cynical old Wall Street saw Bin Laden's death as little more than an opportunity to lock in profits. Our big miners were weak in US trade, suggesting a soft start for our market this morning. The US dollar looks like it may be building a short-term bottom, which would relieve some of the pressure on our market from the surging Australian dollar. Of more immediate concern is the sharp fall in silver and more moderate losses in gold, oil and copper.

INTEREST RATES: Most analysts think it's too soon for the Reserve Bank to adjust its benchmark cash rate at today's meeting, but there's just enough doubt for the market to pay attention. Some are even suggesting that the next move might be lower to take some of the heat out of our soaring dollar. That would be a big plus for our struggling share market, but traders rank pretty low on the RBA's list of concerns, lol. The cash rate will be announced here at 2.30 pm.

ECONOMIC NEWS: Today's main local event is the RBA cash rate and rate statement, due at 2.30 pm (see above). Japanese markets are closed from today until Friday for a bank holiday. A quiet session for scheduled news tonight in the US includes monthly factory orders and vehicle sales.

Good luck to all.