daytrading feb 1 pre-market

Morning traders.

Market wrap:

Stocks face a marginally positive start after the big Australian miners rebounded in overseas trade and US stocks dipped under disappointing jobless claims and corporate earnings.

The March SPI 200 futures contract ended the night session five points or 0.1% ahead at 4850 as share indexes in the US trimmed their best start to a year in decades.

The S&P 500 dropped 0.26% after improved personal income and consumer spending failed to offset earnings misses and a jump in first-time unemployment claims. The Dow gave up 45 points or 0.33% and the Nasdaq lost just 0.01% as tech stocks and telecoms led the night's few gains.

"The weakened activity today is the market succumbing to gravitational pull," the chief investment strategist at Janney Montgomery Scott in the US told MarketWatch. "I am not looking at this as a reaction to any new news as much as a market that has come out of the block too far, too fast and is likely in need of a breather or some rest."

Personal incomes in the US jumped 2.6% in December, the biggest increase in eight years, as companies fast-tracked dividend payments to avoid increased taxes in January. Consumer spending increased 0.2% and a measure of manufacturing activity in the greater Chicago region hit a nine-month high. Less positive was a 38,000 surge in first-time unemployment claims last week to 368,000. The rise sucked away some of the optimism after claims hit a five-year low the previous week.

Also weighing on market sentiment were poorly-received earnings from UPS, Dow Chemical and Facebook. Shares in UPS, seen by some as a bellwether for global economic activity, dropped 2.4% after it downgraded its outlook on weak overseas demand.

BHP and Rio Tinto resisted a downdraught in the US materials sector overnight as oil and metals fell back. BHP put on 1.03% in US trade and Rio Tinto added 1.07%, supported by a $3 rise in the Metal Bulletin Iron Ore Index yesterday to US$153.25 per tonne.

Oil pared a 2.1% rise over the last three sessions as the jump in US jobless claims raised questions over the likely strength of tonight's monthly government employment report. West Texas Intermediate crude for March delivery was recently down 44 cents or 0.45% at US$97.50 a barrel after dropping as low as US$96.82.

Industrial metals also trimmed three days of gains that on Wednesday lifted most to multi-month highs. US copper for March delivery was recently down two cents or 0.4% at US$3.74 a pound. In London, copper fell 0.7%, aluminium 0.7%, lead 0.3%, nickel 0.1%, tin 0.6% and zinc 0.5%.

Gold erased most of Wednesday's advance as the prospect of a strong US jobs report tonight overshadowed the positive implications of the continuation of the Federal Reserve's inflationary stimulus program. Gold for April delivery was lately down $16.10 or 1% at US$1,665.50 an ounce.

European shares wrapped up their best month since July with declines as the market responded to the US Federal Reserve's downbeat economic outlook. The Stoxx Europe 600 trimmed its monthly gain to 2.7% with a fall of 0.49% as Germany's DAX shed 0.45%, France's CAC 0.86% and Britain's FTSE 0.73%.

TRADING THEMES TODAY

CHINESE SAFETY NET?: You can feel some of the optimism ebbing from the market this week after an extraordinary two and a half months. The best-case scenario is a short, sharp retreat to more appealing levels to draw in cash from the sidelines and provide a base for another up-leg. This market still looks like going higher, but it needs a breather. In other words, I'm long-term bullish but short-term bearish. US traders are slightly less optimistic about tonight's monthly jobs report after weak benefits claims took the shine off ADP's private payrolls report on Wednesday. Still, our market is unlikely to travel far today unless the lunchtime Chinese manufacturing figures surprise one way or the other (see below). And a more cynical observer would point out that Chinese economic figures tend to come in bang on consensus.

CHINESE FACTORY ACTIVITY ACCELERATES?: Our market should catch a mid-session boost today with a reminder that economic activity in the biggest buyer of Australian resources is growing. The official government manufacturing purchasing managers' index, due at noon EST, is expected to rise to 51.1 from 50.6 in December, according to Forex Factory. The final version of HSBC's rival index, which focuses on smaller enterprises and is due at 12.45pm, is tipped to rise to 52.1 from 51.9.

ECONOMIC NEWS: The monthly manufacturing index is due at 9.30am EST, followed by the producer price index at 11.30am and year-on-year commodity prices at 4.30pm. However, today's most likely market-moving events during the session are twin Chinese manufacturing reports at noon and 12.45pm (see above). Europe releases unemployment and manufacturing data tonight. Manufacturing figures are also scheduled tonight in the US, along with the unemployment rate, non-farm employment report, revised consumer sentiment and inflation expectations, construction spending, manufacturing prices, average hourly earnings and vehicle sales.

Good luck to all.