Daytrading August 22 pre-market

Morning traders. Thanks Shantaram and after-market regulars.

Market wrap:

A seventh day of gains is a possibility for Australian shares after US stocks hit an all-time high amid robust economic data and expectations that the Federal Reserve will remain dovish.

The September SPI 200 futures contract rallied 10 points or 0.2% to 5615 as European and US markets shrugged off yesterday's disappointing Chinese factory update.

The S&P 500 put on five points or 0.28% overnight to extend the current rally to a fourth session, the longest in two months. The index closed at a new peak of 1,992.37 after earlier rising to within five points of the 2,000 level. The Dow advanced 60 points or 0.35% and the Nasdaq added six points or 0.12%.

The gains followed a round of strong US economic data ahead of the start of the Fed's annual two-day symposium at Jackson Hole tonight. Fed Chair Janet Yellen is due to make an address at the event.

“The thesis for the second half is better growth,” Krishna Memani, chief investment officer at OppenheimerFunds in the US, told Bloomberg. “The expectation for tomorrow is that Yellen is not going to say anything dramatic that’s going to be different from what she’s said before.”

Expectations for the second half of the year were boosted by a gauge of economic activity for the next six months, which jumped 0.9% last month as the economy accelerated out of a winter slump. Sales of existing homes increased by 2.4% over the same period to the strongest pace of the year, trumping analysts' predictions that sales would deteriorate. A preliminary measure for manufacturing output this month hit a four-year high, improving to 58 from a reading of 55.8 last month. A separate gauge of activity in the greater Philadelphia region hit a three-year high. Jobless claims fell more than expected to 298,000 last week from 311,000.

“We’ve had a paradigm where good economic news is bad news [for the market], but it’s clear this week that good news is just good news,” Quincy Krosby,  market strategist at Prudential Financial in the US, told Bloomberg. “The package of data today was strong and the market is responding accordingly.”
European stocks have been slower to recover from this month's Ukraine-Russia geopolitical shock but the repair work continued last night despite a mixed bag of manufacturing and services updates. The Stoxx Europe 600 index rose 0.66% as Germany's DAX tacked on 0.94% and France's CAC 1.23%.

Britain's FTSE trailled with a rise of 0.33% as yesterday's Chinese factory update weighed on resource stocks. HSBC's preliminary manufacturing PMI fell from 51.7 to 50.3, a three-month low, just above the level that separates expansion from contraction. BHP lost 0.66% and Rio Tinto 0.49% in US trade. Spot iron ore for import to China yesterday dropped 40 cents to US$91.90 a dry tonne.

Gold traders took a bearish view of all the upbeat US economic news, speculating that the Fed will be encouraged to raise interest rates next year, undermining demand for alternative stores of wealth. Gold for December delivery  shed $19.80 or 1.5%, settling at US$1,275.40 an ounce. The contract was lately trading at US$1,277.30.

Oil continued to recover from a nine-month low following Wednesday night's bullish US inventories report. West Texas Intermediate crude oil for delivery in October advanced 51 cents or 0.6% to settle at US$93.96 a barrel and was recently at US$93.90.
Base metals were mixed as traders weighed the deterioration in China against signs of strength in the US. In London, copper edged up 0.1% and zinc 0.25%. Aluminium fell 0.7%, tin 1%, nickel 0.7% and lead 0.55%. US copper for September delivery was unchanged at US$3.18 a pound.

The dollar was this morning buying 93.06 US cents.

TRADING THEMES TODAY

BULLS IN CONTROL: A strong week on the ASX looks likely to end near a six-year high unless our old friend, the Friday fade, makes an appearance.There was no obvious concern in the US ahead of the Fed's annual two-day talk-fest, with the market comfortable that Chair Janet Yellen won't spring any nasty surprises. Back home. the tea leaves suggest  a mixed market today, with resource stocks - especially gold miners - likely to be weak, and other sectors providing a counter-balance. An index of US gold miners dived 2% overnight. The earnings season will continue to offer trading opportunities. Among those due to report today are: DUE, FDC, IFL, ILU, NEA, QUB, STO and VTG (sources: Fairfax, BRR).

ECONOMIC NEWS: No significant domestic news scheduled today. Tonight's big news item in the US is the Fed's Jackson Hole Symposium, due to be addressed by Janet Yellen and European Central Bank President Mario Draghi.

Good luck to all.