Daytrading Feb 26 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

A flat close on Wall Street and weakness in key commodities point to a soft start to Australian trade.

The March SPI 200 futures contract slipped 19 points or 0.3% to 5903 as US stocks turned lower and iron ore and base metals lost ground despite the return of Chinese buyers from a week-long holiday.

The S&P 500 retreated from record levels as Federal Reserve chair Janet Yellen testified for a second day on Capital Hill, housing data failed to inspire and oil rebounded. The benchmark index eased one and a half points or 0.08% after earlier trading as much as five points ahead. The Dow clung to a gain of 16 points or 0.09% for a new record close and the Nasdaq broke an 10-session winning run with a loss of one point or 0.02% as tech giants Apple and Hewlett-Packard declined.

“We’ve had a great run and we’re still up around the new highs,” Matt Kaufler, portfolio manager of Federated’s Clover Value Fund in the US, told Bloomberg. “It’s not uncommon to take a brief pause.”

Fed chair Janet Yellen stuck to a familiar script in her second appearance before Congress in two days, repeating that wage growth and inflation remain low and the central bank will will not raise rates until inflation is rising towards the Fed's 2% target. However, recent improvements in the labour market mean the Fed “will at some point begin considering an increase in the target range for the federal funds rate”. Read more here.

New houses sold at a slightly faster rate than economists expected last month, but remained well below the historic average. There were 481,000 sales last month, close to the December six-year high of 482,000, but well below the 30-year average of  710,000.

Oil rallied for the first time in four sessions, despite news of a seventh straight increase in US stockpiles. West Texas Intermediate crude oil for April delivery jumped $1.71 or 3.5% to settle at US$50.99 a barrel, boosting the US energy sector 0.51%.

Iron ore resumed trade following several days of Chinese public holidays with a mild retreat. Spot iron ore for import to China yesterday slipped 50 cents to US$62.90 a dry tonne. BHP extended recent gains in the US with a rise of 0.46% overnight, while Rio Tinto fell 0.53%.

Copper dropped from a six-week high as the return of Chinese buyers and an upbeat factory activity report yesterday offered base metals little support. In London, copper declined 0.4%, aluminium 0.8%, lead 1.4% and zinc 0.8%. Nickel improved 0.3% and tin 0.1%.

"Yesterday [Tuesday] we saw a massive short-covering rally, so it's not really surprising that [copper is] off a little today," analyst David Wilson at Citigroup in the UK told Reuters. "I suspect some of those shorts that covered yesterday have come back to sell."

US gold stocks rallied 1.77% as weakness in the US dollar helped gold rise for the first time in four sessions. Gold for April delivery settled $4.20 or 0.4% at US$1,201.50 an ounce.

European stocks closed lower for the first time in seven sessions but little changed from Tuesday's seven-year high.  The Stoxx Europe 600 lost 0.13 % as Germany's DAX added 0.04%, France's CAC slipped 0.09% and Britain's FTSE lost 0.21%.

The dollar was this morning buying 78.91 US cents.

TRADING THEMES TODAY

BREATHER: World markets paused overnight after several days of steady gains pushed Wall Street to an all-time high and Europe to its strongest point in seven years. Australia, too, closed at a near-seven-year high yesterday, so a minor retreat is no cause for concern, if that is indeed how this session plays out. There is so much momentum in the market that a rise would not surprise. Gold and oil stocks were among the leading sectors in the US. Biotechs also improved. The domestic spec market continues to throw up great opportunities at both intraday and short-term level, with evidence in recent days that some of the market 'sleepers' are finally waking up.   

ECONOMIC NEWS: Quarterly private capital expenditure figures are due at 11.30am EST. The US has some meaty data out tonight, including consumer inflation/core CPI, weekly jobless claims, durable goods/core durable goods and house price index.

Good luck to all.