Daytrading August 3 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

The first trading day of August looks likely to start soft after US stocks retreated on weak economic signals and corporate earnings disappointments.

The September SPI200 futures contract eased 12 points or 0.2% to 5639 as gains in BHP and Rio Tinto in overseas trade were offset by weakness in crude oil, iron ore and copper.

US stocks surrendered early gains as the energy sector fell sharply and investors reconsidered the likelihood of a September rate rise after dire wage data undermined the argument that the US economy has momentum. The S&P 500 flipped an initial rise of five points into a loss of five points or 0.23%, the benchmark index's first fall in four sessions. The Dow gave up 56 points or 0.32% and the Nasdaq half a point or 0.01%.

The session's big talking point was "clearly the employment cost index and its impact on the dollar, gold, oil and Treasurys," Peter Boockvar, chief market analyst at The Lindsey Group in the US, told CNBC. "I think the stock market is struggling with continued soft economic data. Maybe it means the Fed won't raise interest rates. The US economy is struggling and that's not a good thing."

Wages rose an anemic 0.2% last quarter, according to the Labor Department's employment cost index. The gain was the lowest on record, a substantial decline from growth of 0.7% in the first quarter and well short of the 0.6% reading anticipated by economists. The report briefly pushed the US dollar sharply lower as traders reduced bets that the Fed will raise its key rate next month.

“It makes it that much tougher for the Fed to raise rates when you have no wage growth,” Bruce Bittles, chief investment strategist at Robert W Baird, told Bloomberg. “In a market that’s trading in such a tight trading range, investors are taking any piece of material that comes out as potentially being important to changing the character of the market.”

Adding to concerns about the US economy, a separate report showed consumer confidence slumped to an eight-month low last month as weak wage growth ans stock market ructions dampened expectations. The University of Michigan final index of sentiment declined to 93.1 from 96.1 in June. Read more here.

The energy sector was again the biggest laggard following poorly-received earnings updates from industry heavyweights Chevron and Exxon Mobil. The energy ETF dived 2.19% as both companies gave up more than 4.5%. July was the sector's worst month since November. Traditional defensive sectors health stocks and utilities were Friday's best performers.

Oil ended the month with a loss of 21%, its heaviest monthly decline of the year as the market's partial recovery faded. On Friday West Texas Intermediate crude oil for September delivery settled $1.40 or roughly 2.9% lower at US$47.12 a barrel after data showed the number of drilling rigs deployed in the US unexpectedly increased last week.

A decline in iron ore failed to arrest last week's recovery in Australian ore giants BHP and Rio Tinto in US trade. BHP gained 0.63% and Rio Tinto 1.1% on Friday. Spot iron ore for import to China retreated $1.70 to US$52.90 a dry ton. Ore with 62% content delivered to Qingdao dropped 4% to $US53.41 a dry ton.

US gold miners welcomed some relief buying as the weak wage data pushed the greenback lower. The NYSE Arca Gold Bugs index rallied 3.05% and gold for August delivery settled $6.50 higher at US$1,094.90 an ounce. Despite Friday's rebound, gold's fall of 6.5% over the month was its worst monthly return in two years.

Aluminium touched a six-year low on concerns about over-supply during a mixed session on the London Metal Exchange. Copper shed 0.6%, aluminium 1.5%, lead 0.6% and zinc 1.8%. Nickel improved 0.2% and tin 0.7%. US copper for September delivery declined 1% to US$2.35 a pound.

Europe's benchmark index broke even late in the session as most regional indexes advanced. The Stoxx Europe 600 edged up 0.03%, Germany's DAX 0.46%, France's CAC 0.72% and Britain's FTSE 0.41%.

The dollar was this morning buying 73.2 US cents.

TRADING THEMES TODAY

PRESSING AGAINST RESISTANCE: The XJO staged a solid recovery last week that pushed it back up to short-term overhead resistance. With Greece and - to a lesser extent - China temporarily behind us as issues, the market looks to be in recovery and likely to move higher in the weeks ahead. Whether today is the day to break that resistance remains to be seen. We may see a little of Friday's end-of-month window dressing unwind in the first hour and then we'll get a better feel for how the session will unfold.  Domestic job advertising figures at 11.3oam EST and Chinese factory data 15 minutes later will have a say in the final outcome.

ECONOMIC NEWS: The new month starts with a flurry of potentially market-moving data, including the AIG Manufacturing Index at 9.30am EST, Melbourne Institute inflation gauge at 10.30am, new home sales at 11am, job ads at 11.30am and the final manufacturing PMI for China at 11.45am. A busy night ahead in the US includes: personal spending and income, core consumer price index, rival manufacturing PMIs, manufacturing prices, construction spending vehicle sales and a speech by a Fed official.

Good luck to all.