daytrading aug 1 pre-market

Morning traders.

Market wrap:

A soft start to Australian trade is likely after traders in Europe and the US began locking in profits ahead of central bank decisions tonight and tomorrow.

The September SPI 200 futures contract closed 17 points or 0.4% weaker at 4210 as a "risk-off" session produced declines in oil and most metals, as well as US and European equities.

The S&P 500 faded to a loss of 0.43% following some disappointing earnings reports, tepid economic news and growing scepticism that the Federal Reserve will announce any new measures at the conclusion of a two-day meeting tonight. The Dow dropped 64 points or 0.49% and the Nasdaq lost 0.22%.

"People are taking some chips off the table as they don't expect the Fed to come up with any positive surprise," the chairman of Holland & Co in the US told Bloomberg. "In addition, you have a mixed bag of earnings and news out of Europe is not helping."

European markets gave back some of their recent gains after an official at Germany's Bundesbank dampened expectations for tomorrow's European Central Bank meeting and some high-profile companies reported weaker earnings than expected. The unidentified official was quoted on CNBC as opposing a relaunch of the ECB's sovereign bond-buying program, which was widely seen as the most likely announcement tomorrow to help reduce borrowing costs for Spain and Italy. Read more here.

Another report by Bloomberg said Germany's finance ministry opposes granting the permanent European rescue fund a bank licence, a proposal that had been gathering support because it would allow the fund to borrow more money to assist troubled states. Germany's DAX retreated 0.03%, France's CAC 0.87% and Britain's FTSE 1.02%.

The night's economic news did little to force the Federal Reserve's hand tonight. Consumer spending moderated for a second month in June but consumer confidence unexpectedly improved for the first time in five months. House prices increased in May for a second straight month in another sign that the housing market is stabilising.

Oil retreated to its lowest settlement since mid-July before paring its decline. West Texas crude for September delivery was lately off $1.71 or 1.9% at US$88.07 a barrel.

Most industrial metals fell back ahead of today's monthly Chinese manufacturing update, but copper held its ground. In London, aluminium lost 0.6%, lead 1.6%, nickel 2.4%, tin 1% and zinc 1.1%. Copper squeezed out a rise of 0.1% in London and was lately up less than one cent or 0.1% at US$3.42 a pound in the US.

Gold broke its four-day winning run as doubts grew over whether this week's central bank decisions will produce concrete action. Gold for August delivery was recently down $6.40 or 0.4% at US$1,613.30 an ounce.

TRADING THEMES TODAY

CHINA TO SET THE TONE: The first of this week's big market-moving news events happens just an hour into Australian trade with the release of the official Chinese manufacturing purchasing managers' index for July at 11am EST. The consensus economists' forecast is for a mild increase from 50.2 in June to 50.4. Anything better would imply that recent monetary easing in China is starting to have an impact and might be enough to drive a fifth day of gains on the ASX. The final version of HSBC's rival private manufacturing report is due at 12.30pm, but generally has little impact. Traders in Europe and the US predictably took some money off the table before possible disappointments from the Fed, ECB and Bank of England over the next two nights. Tech stocks bucked the downtrend in the US, while banks, biotechs, oilers and precious metals miners were notably weak.

ECONOMIC NEWS: AIG's manufacturing index is due at 9.30am EST, followed by the house price index at 11.30am. China releases its official manufacturing index at 11am and the final version of HSBC's report at 12.30pm (see above). Manufacturing reports are due tonight in Europe and the US, but the main event is the policy statement from the Federal Reserve, late in the session. Also due tonight in the US: non-farm employment change, construction spending, manufacturing prices, crude oil inventories and total vehicle sales.

Good luck to all.