daytrades september 16 pre-market

Morning traders.

Market wrap: Wall Street resumed its up-trend overnight, suggesting early gains for local shares today, but a bounce in the U.S. dollar may crimp resource stocks.

The September SPI futures contract this morning closed 11 points stronger at 4668, pointing to a fourth straight positive start for the share market.

Wall Street's major indexes shrugged off early weakness after lukewarm economic reports to advance for the fifth time in the last six sessions and finish near key resistance levels. The Dow added 46 points or 0.44%, the S&P 500 0.35% and the Nasdaq 0.5%.

The early mood was muted after reports showed U.S. industrial production eased from 0.6% growth in July to +0.2% last month and manufacturing in the New York region continued to weaken this month. But the indexes reversed as health stocks found buyers on speculation of merger action and Cisco Systems' first dividend generated interest in tech stocks.

"The stock market is stabilising," an analyst at Huntington Asset Advisors in the U.S. told Bloomberg. "Everybody knew the kind of slow economic growth we'd see."

Key commodity prices eased as the U.S. dollar rallied after the Japanese government intervened to try to stem the rising yen, which is hurting exports. The dollar index, which measures the greenback against a basket of currencies, was recently up 0.5%, bucking the recent downtrend.

U.S. energy stocks were mostly flat or lower after crude suffered its biggest fall in two weeks. Sentiment was cooled by the rising dollar and news that a pipeline carrying oil from Canada will be allowed to reopen. Crude oil futures were recently down $1.11 or 1.45% at $75.69 a barrel.

Base metals were mostly lower after the weak U.S. industrial production report and reports that China is considering raising banking reserve requirements, a move seen as negative for demand for raw materials.

"It looks as if the government in China is focusing on trying to constrain excesses in the property market, that it is considering increasing capital ratios," an analyst at Deutsche Bank told Reuters.

In late trade in London, copper was down 0.5%, aluminium 0.6%, lead 1.1%, nickel 0.8% and zinc 1.8%. Tin advanced to its highest level since July 2008, closing 2% higher.

Gold consolidated Tuesday night's break to a record high. The spot price was recently trading 60 cents weaker than Tuesday's New York close at $1,268.10 an ounce.

The major European markets closed weaker after the soft U.S. economic reports hit the market. Britain's FTSE eased 0.21%, Germany's DAX 0.22% and France's CAC 0.5%.

TRADING THEMES TODAY

CONFLICTING WINDS: Wall Street's rise suggests our market should go up, falls in commodity prices suggest we go down. There's no question that our market is in bullish mood but it may be that we pre-empted the overnight action with yesterday's gains. Wall Street faces significant overhead resistance tonight, plus a heavy schedule of economic reports. Reports of further Chinese banking restraints are a negative for our resources sector. Locally, the end of the week tends to be less bullish than the start and it's often around Thursday that cracks appear as traders begin to lock in profits. Also, our market is starting to look overdue for a breather. In other words, the balance of probability seems less favourable today than earlier in the week. However, gold held its gains overnight and that may be a profitable sector once again today.

ECONOMIC NEWS: The monthly inflation expectations report is due at 11.00 am. The quarterly RBA bulletin is due at 11.30 am. A busy schedule tonight in the U.S. includes unemployment claims, the producer price index, long-term purchases, the current account, more regional manufacturing, natural gas storage and testimony from Treasury Secretary Geithner.

Good luck to all.