daytrading april 3 pre-market

Morning traders.

Market wrap:

Upbeat US and Chinese manufacturing reports boosted Wall Street and commodity markets overnight and have Australian shares aiming higher this morning.

The June SPI 200 futures contract ended the night session 27 points or 0.6% higher at 4360 as the Dow recorded its highest close since December 2007 and oil and metals rallied.

US stocks added to their best start to a year since 1998 as strong March manufacturing data offset a drop in construction spending and weak economic news from Europe. The S&P 500 advanced 0.75% to its strongest close since May 2008. The Dow added 52 points or 0.4% and the Nasdaq put on 0.91%

Manufacturing in the US grew faster than economists predicted last month, lifting a factory index to 53.4 from 52.4 in February, against the median economist's forecast of 53. The report came a day after the official Chinese manufacturing report showed a mild acceleration in factory output. Together, the reports helped investors shrug off an unexpected 1.1% drop in construction spending in February.

"The reports out today are seen as moderately positive," the managing director of active trading and derivatives at Charles Schwab told MarketWatch. "The market is looking ahead 6-18 months from now, and the expectation is the economy is going to be solid."

The rally in the US helped push European markets to their best session in three weeks, overcoming early weakness after reports showed unemployment in the euro-zone at record levels and a decline in manufacturing accelerating last month. Britain's FTSE surged 1.85%, Germany's DAX 1.58% and France's CAC 1.14%.

Resources benefitted from a declining US dollar and signs of improving manufacturing output in the world's two largest economies. Copper reached its highest price in a month as money flowed back into industrial metals. In London, copper rallied 2.3%, aluminium 0.2%, lead 1%, nickel 2.2%, tin 2% and zinc 0.35%. US copper was recently up 2.3%.

Oil found additional support from reports that the self-governing Kurdistan region in Iraq has stopped exports over a dispute about payments. Crude for May delivery was recently ahead $2.08 or 2% at US$105.10 a barrel.

Gold rallied ahead of the wedding season in India and as a two-week strike by jewellers in the sub-continent appeared to end. Gold for June was lately up $7.40 or 0.4% at US$1,679.30 an ounce.

TRADING THEMES TODAY

EXTENDING THE RALLY: The local market has been looking short-term toppy, failing to finish anywhere near its intraday high for the last three sessions. However, there's plenty to like about a bright set of overnight leads, so the market should extend its recent gains today. Some of the recent weakness can be put down to end-of-quarter profit-taking last week and institutional portfolio rebalancing yesterday, factors that should ease now (just in time for the looming long weekend to weigh on risk appetite, lol).

INTEREST RATES: There has been an interesting division of opinion on the outlook for interest rates developing between currency markets and domestic economists. None of the economists surveyed by the news organisations expect the Reserve Bank to drop the overnight cash rate at today's meeting, yet the dollar has been under recent pressure as international money takes its cue from a run of mostly weak economic news here and from China. We'll learn at 2.30pm EST today which faction is right.

ECONOMIC NEWS: Monthly retail sales numbers are due at 11.30am EST. The Reserve Bank is due to release the cash rate and rate statement at 2.30pm. Trading in China is suspended until Thursday for a three-day public holiday. Forex Factory says the Chinese services index is due to be released at 11am, but that seems unlikely during a holiday? Highlights tonight in the US include factory orders, the minutes from the last Federal Reserve meeting and vehicle sales.

Good luck to all.